Exhibit B-119
LIMITED LIABILITY COMPANY AGREEMENT
OF
MUNICIPAL SOLUTIONS, LLC
January 9, 1997
TABLE OF CONTENTS
PAGE
ARTICLE 1
THE LIMITED LIABILITY COMPANY 1
1.1 FORMATION OF LIMITED LIABILITY COMPANY 1
1.2 REGISTERED OFFICE AND AGENT 1
1.3 PURPOSE 1
1.4 PRINCIPAL PLACE OF BUSINESS 2
1.5 PROPERTY 2
1.6 PAYMENT OF INDIVIDUAL OBLIGATIONS 2
ARTICLE 2
DEFINITIONS 2
2.1 DEFINITIONS 2
(a) "ADJUSTED CAPITAL ACCOUNT BALANCE" 2
(b) "CAPITAL ACCOUNT" 2
(c) "CAPITAL CONTRIBUTION" or "CAPITAL
CONTRIBUTIONS" 3
(d) "CODE" 3
(e) "COMPANY MINIMUM GAIN" 4
(f) "DEPRECIATION" 4
(g) "ECONOMIC INTEREST" 4
(h) "ECONOMIC INTEREST OWNER" 4
(i) "GROSS ASSET VALUE" 4
(j) "INTERNAL RATE OF RETURN" 5
(k) "KLT LOAN" 5
(l) "KLT LOAN INTEREST" 5
(m) "MAJORITY IN INTEREST" 5
(n) "MANAGEMENT COMMITTEE" 5
(o) "MANAGER" 5
(p) "MEMBER" 6
(q) "MEMBER NONRECOURSE DEBT" 6
(r) "MEMBER NONRECOURSE DEBT MINIMUM
GAIN" 6
(s) "MEMBER NONRECOURSE DEDUCTIONS" 6
(t) "NET CASH FLOW" 6
(u) "NET PROFITS" and "NET LOSSES" 6
(v) "NONRECOURSE DEDUCTIONS" 7
(w) "NONRECOURSE LIABILITY" 7
(x) "OPERATING COSTS" 7
(y) "PERCENTAGE INTEREST" 7
(z) "PERSON" 8
(aa) "PROCEEDS" 8
(bb) "REGULATIONS" 8
(cc) "RESIDUAL CAPITAL ACCOUNT BALANCE" 8
(dd) "VOTING RIGHTS" 8
3.1 MANAGEMENT COMMITTEE 8
3.2 CHAIRMAN, VICE-CHAIRMAN AND OTHER
OFFICERS 9
3.3 MEETINGS 9
3.4 QUORUM 9
3.5 VOTING 9
3.6 ACTION WITHOUT A MEETING 10
3.7 TELEPHONE MEETINGS 10
3.8 WAIVER OF NOTICE 10
3.9 SALARY AND EXPENSES 10
3.10 OPERATING BUDGETS 10
3.11 LIMITATION ON POWERS OF MANAGEMENT
COMMITTEE 11
3.12 DUTIES OF MANAGER 11
3.13 REMOVAL OR RESIGNATION OF MANAGER 12
3.14 COMPENSATION OF MANAGER 13
3.15 RESTRICTIONS ON THE MEMBERS 13
3.16 MEMBERS' OBLIGATION TO APPROVE
ALTERNATIVE FUNDING TO KLT LOANS 13
ARTICLE 4
RIGHTS AND OBLIGATIONS OF MEMBERS 13
4.1 LIMITATION OF LIABILITY 13
4.2 COMPANY LIABILITIES 13
4.3 PRIORITY AND RETURN OF CAPITAL 13
4.4 LIABILITY OF A MEMBER OR ECONOMIC
INTEREST OWNER TO THE COMPANY 13
4.5 INDEPENDENT ACTIVITIES 14
ARTICLE 5
MEETINGS OF MEMBERS 14
5.1 ANNUAL MEETING 14
5.2 SPECIAL MEETINGS 14
5.3 PLACE OF MEETINGS 14
5.4 NOTICE OF MEETINGS 14
5.5 MEETING OF ALL MEMBERS 14
5.6 RECORD DATE 15
5.7 QUORUM 15
5.8 VOTING 15
5.9 PROXIES 15
5.10 ACTION BY MEMBERS WITHOUT A MEETING 15
5.11 WAIVER OF NOTICE 15
ARTICLE 6
CAPITAL CONTRIBUTIONS 16
6.1 INITIAL CAPITAL CONTRIBUTIONS 16
6.2 INCREASE IN COMPANY CAPITAL 16
6.3 FAILURE TO CONTRIBUTE 17
6.4 CAPITAL ACCOUNTS OF MEMBERS 19
6.5 ADJUSTMENT OF PERCENTAGE INTERESTS 19
6.6 INTEREST AND OTHER AMOUNTS 20
6.7 AMENDMENT OF DOCUMENTS 20
6.8 LOANS OF MEMBERS 20
6.9 WITHDRAWAL OF CAPITAL CONTRIBUTION 20
6.10 KLT LOAN 20
SECTION 7 22
7.1 NET PROFITS 22
7.2 NET LOSSES 22
7.3 SPECIAL ALLOCATIONS 23
7.4 OTHER ALLOCATION RULES 24
7.5 TAX ALLOCATIONS: CODE SECTION 704(C) 24
ARTICLE 8
ACCOUNTING, DISTRIBUTIONS AND TAXES 25
8.1 DISTRIBUTION OF NET CASH FLOW 25
8.2 ACCOUNTING 26
8.3 TAX ELECTIONS 27
8.4 TAX MATTERS MEMBER 27
ARTICLE 9 27
9.1 IN GENERAL 27
ARTICLE 10
TRANSFERABILITY 28
10.1 GENERAL 29
10.2 RIGHT OF FIRST OFFER 29
10.3 DOBELL PUT OPTION 31
10.4 CHANGE OF CONTROL 33
10.5 KLT'S OPTION TO PURCHASE. 34
10.6 TRANSFEREE NOT MEMBER IN ABSENCE OF
CONSENT 35
ARTICLE 11
ADMISSION OF SUCCESSOR MEMBERS OR NEW MEMBERS 35
11.1 ADMISSION OF SUCCESSOR MEMBERS OR NEW
MEMBERS 35
11.2 FINANCIAL ADJUSTMENTS 36
ARTICLE 12
TERM. TERMINATION. AND DISTRIBUTION UPON LIQUIDATION 36
12.1 TERM 36
12.2 WITHDRAWAL OF A MEMBER 36
12.3 EVENTS OF DISSOLUTION 37
12.4 BANKRUPTCY OF A MEMBER 38
12.5 OPTION TO PURCHASE 39
12.6 CESSATION OF BUSINESS 39
12.7 WINDING UP. LIQUIDATION. AND DISTRIBUTION
OF ASSETS 39
12.8 CERTIFICATE OF CANCELLATION 40
12.9 RETURN OF CONTRIBUTION NONRECOURSE TO
OTHER MEMBERS 41
ARTICLE 13 41
13.1 WAIVER OF RIGHT OF PARTITION 41
13.2 NOTICES 41
13.3 GOVERNING LAW 41
13.4 ENTIRE AGREEMENT 41
13.5 BINDING AGREEMENT 42
13.6 INTERPRETATION 42
13.7 SEVERABILITY 42
13.8 WAIVER 42
13.9 EQUITABLE REMEDIES 42
13.10 ATTORNEY'S FEES 42
13.11 COUNTERPARTS 43
13.12 GENDER 43
13.13 SAVING CLAUSE 43
13.14 FURTHER DOCUMENTATION 43
13.15 INCORPORATION OF RECITALS 43
13.16 INDEMNIFICATION. 43
EXHIBIT B
Promissory Note 46
EXHIBIT C
Operational and Financial Objectives 48
EXHIBIT D
Credit Agreement 50
LIMITED LIABILITY COMPANY AGREEMENT
OF
MUNICIPAL SOLUTIONS, LLC
THIS LIMITED LIABILITY COMPANY AGREEMENT ("LLC
Agreement"), is made and entered into to be effective as
of the 9th day of January, 1997, by and between KLT
Telecom Inc., a Missouri corporation ("KLT"), and Xxxxx
Xxxxxx ("Xxxxxx"), (KLT and Dobell each hereinafter
referred to as a "Member").
WHEREAS, the Members have agreed to organize a
limited liability company governed by the Delaware
Limited Liability Company Act (the "Delaware Act");
NOW, THEREFORE, in consideration of the mutual
covenants and benefits set forth below, and other good
and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties agree as
follows:
ARTICLE 1
THE LIMITED LIABILITY COMPANY
1.1 FORMATION OF LIMITED LIABILITY COMPANY. The
Certificate of Formation of Municipal Solutions, LLC (the
"Company") was filed in the office of the Secretary of
State of Delaware pursuant to the Delaware Act on January
9, 1997 and is hereby ratified by each of the Members.
All prior agreements concerning the subject matter of
this LLC Agreement are canceled and shall have no further
effect.
1.2 REGISTERED OFFICE AND AGENT. The address of
the Company's registered office in the state of Delaware
is located at 0000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx
00000 or any other or additional place or places as the
Members may determine from time to time, and the
registered agent at such office is The Corporation Trust
Company.
In the event the registered agent ceases to act as
such for any reason or the registered office shall
change, the Management Committee shall promptly designate
a replacement registered agent or registered office as
the case may be, and make the appropriate filings with
the secretary of state. If the Management Committee
shall fail to designate a replacement registered agent or
registered office, as the case may be, then any one
Member may designate a replacement registered agent or
registered office and make the appropriate filings in the
Office of the Secretary of State of Delaware.
1.3 PURPOSE. The purpose and business of the
Company shall be to invest in business ventures as
selected by the unanimous affirmative vote or unanimous
consent of all of the Members with Voting Rights from
time to time and to provide marketing and management
services to such ventures, including, without limitation,
legal, tax and analytical support, and to do all other
things which are reasonably incidental to the foregoing.
The Company may transact any or all other lawful business
for which a limited liability company may be organized
under the Delaware Act upon the unanimous affirmative
vote or unanimous consent of all of the Members with
Voting Rights of the Company specifically authorizing any
such other lawful business.
1.4 PRINCIPAL PLACE OF BUSINESS. The principal
place of business of the Company shall be 0000 Xxxxxx,
Xxxxxx Xxxx, Xxxxxxxx 00000, or at such other place or
places within or without the State of Delaware as the
Management Committee may designate from time to time.
1.5 PROPERTY. All assets, including real and
personal property owned and held by the Company shall be
owned by the Company in the name of the Company and no
Member or Economic Interest Owner shall have any
ownership interest in such property in its individual
name or right. Each Member's or Economic Interest
Owner's interest in the Company shall be personal
property for all purposes. Any deed, xxxx of sale,
mortgage, lease, contract of sale or other instrument
purporting to convey or encumber any interest in the
property of the Company shall be signed only as
authorized by the unanimous affirmative vote or unanimous
consent of all of the Members with Voting Rights.
1.6 PAYMENT OF INDIVIDUAL OBLIGATIONS. The
Company's credit and assets shall be used solely for the
benefit of the Company, and no asset of the Company shall
be transferred or encumbered for or in payment of any
individual obligation of a Member or Economic Interest
Owner.
ARTICLE 2
DEFINITIONS
2.1 DEFINITIONS. As used in this LLC Agreement:
(a) "ADJUSTED CAPITAL ACCOUNT BALANCE" means
the balance (be it positive or negative) which
would be obtained by adding to a Member's or
Economic Interest Owner's Capital Account balance
such Member's or Economic Interest Owner's share of
the "Company Minimum Gain" and "Member Nonrecourse
Debt Minimum Gain."
(b) "CAPITAL ACCOUNT" means, with respect to
any Member or Economic Interest Owner, the Capital
Account maintained for such Person in accordance
with the following provisions:
(i) To each Person's Capital Account
there shall be credited such Member's or
Economic Interest Owner's Capital
Contributions, such Member's or Economic
Interest Owner's distributive share of Net
Profits and any items in the nature of income
or gain which are specially allocated pursuant
to Section 7 hereof, and the amount of any
Company liabilities assumed by such Member or
Economic Interest Owner or which are secured
by any Property distributed to such Member or
Economic Interest Owner.
(ii) To each Member's or Economic
Interest Owner's Capital Account there shall
be debited the amount of cash and the Gross
Asset Value of any Property distributed to
such Member or Economic Interest Owner
pursuant to any provision of this LLC
Agreement, such Member's or Economic Interest
Owner's distributive share of Net Losses and
any items in the nature of expenses or losses
which are specially allocated pursuant to
Section 7 hereof, and the amount of any
liabilities of such Member or Economic
Interest Owner assumed by the Company or which
are secured by any property contributed by
such Member or Economic Interest Owner to the
Company.
(iii) In the event any interest in
the Company is transferred in accordance with
the terms of this LLC Agreement, the
transferee shall succeed to the Capital
Account of the transferor to the extent it
relates to the transferred interest.
(iv) In determining the amount of any
liability for purposes of Sections 2.1(b)(i)
and 2.1(b)(ii) hereof, there shall be taken
into account Code Section 752(c) and any other
applicable provisions of the Code and
Regulations.
The foregoing provisions and the other
provisions of this LLC Agreement relating to the
maintenance of Capital Accounts are intended to
comply with Regulations Section 1.704-1(b), and
shall be interpreted and applied in a manner
consistent with such Regulations. In the event the
Management Committee shall determine that it is
prudent to modify the manner in which the Capital
Accounts, or any debits or credits thereto
(including, without limitation, debits or credits
relating to liabilities which are secured by
contributed or distributed property or which are
assumed by the Company or the Members and Economic
Interest Owners), are computed in order to comply
with such Regulations, such modification shall be
made, provided that is not likely to have a
material effect on the amounts distributable to any
Member or Economic Interest Owner pursuant to
Article 12 hereof upon the dissolution of the
Company. Adjustments and modifications also shall
be made as are necessary or appropriate (i) to
maintain equality between the Capital Accounts of
the Members and Economic Interest Owners and the
amount of Company capital reflected on the
Company's balance sheet, as computed for book
purposes in accordance with Regulations Section
1.704-1(b)(2)(iv)(g), and (ii) in the event
unanticipated events might otherwise cause this LLC
Agreement not to comply with Regulations Section
1.704-1(b).
(c) "CAPITAL CONTRIBUTION" or "CAPITAL
CONTRIBUTIONS" means, with respect to any Member or
Economic Interest Owner, the amount of money and
the Gross Asset Value of any property (other than
money) contributed to the Company with respect to
the Percentage Interest held by such Member or
Economic Interest Owner pursuant to the terms of
this LLC Agreement. The initial Capital
Contributions of the Members are set forth on
EXHIBIT A hereto, which is incorporated herein by
this reference.
(d) "CODE" shall mean the Internal Revenue
Code of 1986, as amended from time to time (or any
corresponding provisions of succeeding law).
(e) "COMPANY MINIMUM GAIN" has the meaning
set forth in Regulations Sections 1.704-2(b)(2) and
1.704-2(d).
(f) "DEPRECIATION" means, for each fiscal
year, an amount equal to the depreciation,
amortization, or other cost recovery deduction
allowable under the Code with respect to an asset
for such fiscal year, except that (i) with respect
to any asset whose Gross Asset Value differs from
its adjusted tax basis for federal tax purposes and
which difference is being eliminated by use of the
"remedial method" defined by Section 1.704-3(d) of
the Regulations, Depreciation for such fiscal year
shall be the amount of book basis recovered for
such fiscal year under the rules prescribed by
Section 1.704-3(d)(2) of the Regulations, and (ii)
with respect to any other asset whose Gross Asset
Value differs from its adjusted tax basis for
federal income tax purposes at the beginning of
such fiscal year, Depreciation shall be an amount
which bears the same ratio to such beginning Gross
Asset Value as the federal income tax depreciation,
amortization, or other cost recovery deduction for
such fiscal year bears to such beginning adjusted
tax basis; provided, however, that if the adjusted
tax basis for federal income tax purposes of an
asset at the beginning of such fiscal year is zero,
Depreciation shall be determined with reference to
such beginning Gross Asset Value using any
reasonable method selected by the Management
Committee.
(g) "ECONOMIC INTEREST" shall mean the
ownership interest of a Person in the Company's Net
Profits, Net Losses and the distribution of Net
Cash Flow and/or the Company's assets pursuant to
this LLC Agreement and the Delaware Act, but shall
not include any right to vote on, consent to or
otherwise participate in any decision of the
Members in the management of the Company.
(h) "ECONOMIC INTEREST OWNER" shall mean any
Person who owns an Economic Interest, but is not a
Member.
(i) "GROSS ASSET VALUE" means, with respect
to any asset, the asset's adjusted basis for
federal income tax purposes, except as follows:
(i) The initial Gross Asset Value of any
asset contributed by a Member or Economic
Interest Owner to the Company shall be the
gross fair market value of such asset, as
determined by the contributing Member or
Economic Interest Owner and all of the
remaining Members;
(ii) The Gross Asset Values of all
Company assets shall be adjusted to equal
their respective gross fair market values, as
determined by the Management Committee, as of
the following times: (A) the acquisition of an
additional interest in the Company by any new
or existing Member or Economic Interest Owner
in exchange for more than a DE MINIMIS Capital
Contribution; (B) the distribution by the
Company to a Member or Economic Interest Owner
of more than a DE MINIMIS amount of property
as consideration for an interest in the
Company; and (c) the liquidation of the
Company within the meaning of Regulations
Section 1.704-1(b)(2)(ii)(g); provided,
however, that adjustments pursuant to clauses
(A) and (B) above shall be made only if the
Management Committee reasonably determine that
such adjustments are necessary or appropriate
to reflect the relative economic interests of
the Members and Economic Interest Owners in
the Company;
(iii) The Gross Asset Value of any
Company asset distributed to any Member or
Economic Interest Owner shall be adjusted to
equal the gross fair market value of such
asset on the date of distribution as
determined by the distributee and the
Management Committee;
(iv) The Gross Asset Values of Company
assets shall be increased (or decreased) to
reflect any adjustments to the adjusted basis
of such assets pursuant to Code Section 734(b)
or Code Section 743(b), but only to the extent
that such adjustments are taken into account
in determining Capital Accounts pursuant to
Regulations Section 1.704-1(b)(2)(iv)(m) and
Sections 2.1(f)(vi) and 7.3(e) hereof;
provided, however, that Gross Asset Values
shall not be adjusted pursuant to this Section
2.1(i)(iv) to the extent the Management
Committee determine that an adjustment
pursuant to Section 2.1(i)(ii) hereof is
necessary or appropriate in connection with a
transaction that would otherwise result in an
adjustment pursuant to this Section
2.1(i)(iv).
If the Gross Asset Value of an asset has been
determined or adjusted pursuant to Section
2.1(i)(i), Section 2.1(i)(ii), or Section
2.1(i)(iv) hereof, such Gross Asset Value shall
thereafter be adjusted by the Depreciation taken
into account with respect to such asset for
purposes of computing Net Profits and Net Losses.
(j) "INTERNAL RATE OF RETURN" has the meaning
set forth in Section 8.1.
(k) "KLT LOAN" has the meaning set forth in
Section 6.10.
(l) "KLT LOAN INTEREST" has the meaning set
forth in Section 6.10.
(m) "MAJORITY IN INTEREST" shall mean more
than fifty percent (50%) of the Voting Rights held
by the Members determined, pursuant to an
affirmative vote or consent of the Members with
Voting Rights at the time the Majority in Interest
provision applies.
(n) "MANAGEMENT COMMITTEE" shall mean the
committee of the Company, appointed by the Members
and established pursuant to Article 3 of this LLC
Agreement.
(o) "MANAGER" shall mean Xxxxx Xxxxxx, or any
replacement Manager appointed by the Management
Committee pursuant to Section 3.13 hereof.
(p) "MEMBER" shall mean any person executing
this LLC Agreement from time to time and as
otherwise admitted as a member of the Company as
provided in Section 11.1 of this LLC Agreement.
(q) "MEMBER NONRECOURSE DEBT" has the meaning
set forth in Section 1.704-2(b)(4) of the
Regulations.
(r) "MEMBER NONRECOURSE DEBT MINIMUM GAIN"
means an amount, with respect to each Member
Nonrecourse Debt, equal to the Company Minimum Gain
that would result if such Member Nonrecourse Debt
were treated as a Nonrecourse Liability, determined
in accordance with Section 1.704-2(i)(3) of the
Regulations.
(s) "MEMBER NONRECOURSE DEDUCTIONS" has the
meaning set forth in Sections 1.704-2(i)(1) and
1.704-2(i)(2) of the Regulations.
(t) "NET CASH FLOW" shall mean, with respect
to any period, the amount (if any) by which the
Proceeds for such period exceed the Operating Costs
for such period, all principal and interest
payments on indebtedness of the Company, and all
other sums paid to lenders.
(u) "NET PROFITS" and "NET LOSSES" means, for
each fiscal year, an amount equal to the Company's
taxable income or loss for such fiscal year,
determined in accordance with Code Section 703(a)
(for this purposes, all items of income, gain,
loss, or deduction required to be stated separately
pursuant to Code Section 703(a)(1) shall be
included in taxable income or loss), with the
following adjustments:
(i) Any income of the Company that is
exempt from federal income tax and not
otherwise taken into account in computing Net
Profits or Net Losses pursuant to this Section
2.1(u) shall be added to such taxable income
or loss;
(ii) Any expenditures of the Company
described in Code Section 705(a)(2)(B) or
treated as Code Section 705(a)(2)(B)
expenditures pursuant to Regulations Section
1.704-1(b)(2)(iv)(i), and not otherwise taken
into account in computing Net Profits or Net
Losses pursuant to this Section 2.1(u) shall
be subtracted from such taxable income or
loss;
(iii) In the event the Gross Asset
Value of any Company asset is adjusted
pursuant to Section 2.1(i)(ii) or Section
2.1(i)(iii) hereof, the amount of such
adjustment shall be taken into account as gain
or loss from the disposition of such asset for
purposes of computing Net Profits or Net
Losses;
(iv) Gain or loss resulting from any
disposition of property with respect to which
gain or loss is recognized for federal income
tax purposes shall be computed by reference to
the Gross Asset Value of the property disposed
of, notwithstanding that the adjusted tax
basis of such property differs from its Gross
Asset Value;
(v) In lieu of the depreciation,
amortization, and other cost recovery
deductions taken into account in computing
such taxable income or loss, there shall be
taken into account Depreciation for such
fiscal year, computed in accordance with
Section 2.1(f) hereof;
(vi) To the extent an adjustment to the
adjusted tax basis of any Company asset
pursuant to Code Section 734(b) or Code
Section 743(b) is required pursuant to
Regulations Section 1.704-1(b)(2)(iv)(m)(4) to
be taken into account in determining Capital
Accounts as a result of a distribution other
than in liquidation of a Member's or Economic
Interest Owner's interest in the Company, the
amount of such adjustment shall be treated as
an item of gain (if the adjustment increases
the basis of the asset) or loss (if the
adjustment decreases the basis of the asset)
from the disposition of the asset and shall be
taken into account for purposes of computing
Net Profits or Net Losses; and
(vii) Notwithstanding any other
provision of this Section 2.1(u), any items
which are specially allocated pursuant to
Section 7 hereof shall not be taken into
account in computing Net Profits or Net
Losses.
The amounts of the items of Company income, gain,
loss or deduction available to be specially
allocated pursuant to Section 7 hereof shall be
determined by applying rules analogous to those set
forth in Sections 2.1(i)(i) through 2/1(i)(vi)
above.
(v) "NONRECOURSE DEDUCTIONS" has the meaning
set forth in Section 1.704-2(b)(1) of the
Regulations.
(w) "NONRECOURSE LIABILITY" has the meaning
set forth in Section 1.704-2(b)(3) of the
Regulations.
(x) "OPERATING COSTS" shall mean, with
respect to any period, all cash expenditures
incurred incident to the normal operation of the
Company's business and any amounts determined by
the Management Committee, from time to time, to be
reasonably necessary to provide a reserve for the
operations, expenses, debt payments, capital
improvements, and contingencies of the Company.
(y) "PERCENTAGE INTEREST" shall mean, with
respect to any Member or Economic Interest Owner,
such Person's percentage interest of the Economic
Interests in the Company as adjusted from time to
time: (i) pursuant to this LLC Agreement; or (ii)
as a result of any Transfer (as defined in Section
10.1 below) by a Member or Economic Interest Owner
of all or a portion of its Economic Interest. The
initial Percentage Interests of the Members are as
designated in Section 6.1 of this LLC Agreement.
(z) "PERSON" shall include any individual,
trust, estate, corporation, partnership, limited
liability company, association or other entity.
(aa) "PROCEEDS" shall mean, with respect to
any period, gross receipts received by the Company
from all sources during such period, including,
without limitation, all sales, other dispositions,
and refinancings of the Company's property, but
does not include Capital Contributions as provided
for in Article 6 of this LLC Agreement or the
proceeds of any KLT Loans to the Company as
provided for in Section 6.10 of this LLC Agreement.
(bb) "REGULATIONS" means the Income Tax
Regulations, including Temporary Regulations,
promulgated under the Code, as such regulations may
be amended from time to time (including
corresponding provisions of succeeding
Regulations).
(cc) "RESIDUAL CAPITAL ACCOUNT BALANCE" means
the excess (if any) of the amount of a Member's or
Economic Interest Owner's positive Adjusted Capital
Account Balance over the amount of such Member's or
Economic Interest Owner's Preference Contributions
Account balance.
(dd) "VOTING RIGHTS" shall mean, with respect
to any Member, such Person's percentage interest in
the voting rights in the Company, as may be
adjusted from time to time pursuant to this LLC
Agreement. The initial Voting Rights of the
Members are as set forth in EXHIBIT A attached to
this LLC Agreement.
ARTICLE 3
MANAGEMENT
3.1 MANAGEMENT COMMITTEE. The business and
affairs of the Company shall be managed by a Management
Committee which, subject to the provisions of this LLC
Agreement, shall have the power and authority to take, or
cause to be taken, any and all actions necessary as
advisable to carry out its duties as described in this
LLC Agreement.
The Management Committee shall consist of
three (3) representatives, two (2) of whom shall be
appointed by KLT and one (1) of whom shall be appointed
by Dobell. In the event of the resignation or death of
a representative, the vacancy shall be promptly filled by
a nominee of the Member who appointed the departing
representative. The appointment of each representative
on the Management Committee subsequent to the initial
representatives named this Section 3.1 shall be evidenced
by an appointment, and acceptance of appointment, in a
writing delivered to the Company by the Member entitled
to appoint such representative. Each representative will
serve on the Management Committee at the pleasure of the
Member appointing him or her. The first Management
Committee shall consist of X.X. Xxxxxx and M.G. English
(appointed by KLT) and Xxxxx Xxxxxx (appointed by
Dobell).
If Dobell transfers any part of his Economic
Interest but retains his Voting Rights, then he shall
retain his rights to appoint a representative to the
Management Committee as provided in this Section 3.1. If
either KLT or Dobell transfer all of their Economic
Interests and the transferee thereof is admitted as a
Member of the Company as provided in Section 11.1 of this
LLC Agreement, then the transferee of such Economic
Interest shall succeed to such Member's rights to appoint
representatives to the Management Committee as provided
in this Section 3.1. If either KLT or Dobell shall
relinquish their Voting Rights pursuant to the terms of
this LLC Agreement, then the other Member shall have the
right to exercise such relinquishing Member's Rights to
appoint representatives to the Management Committee until
such Voting Rights are restored, as the case may be.
3.2 CHAIRMAN, VICE-CHAIRMAN AND OTHER OFFICERS. A
representative on the Management Committee appointed and
so designated by KLT will serve as the Chairman of the
Management Committee, and a representative appointed and
so designated by Dobell will serve as the Vice-Chairman
of the Management Committee. The Company shall have such
other officers as may be appointed by the Management
Committee, or in the absence of such appointment, as
designated by the Chairman of the Management Committee.
X.X. Xxxxxx will serve as the initial Chairman, and
Xxxxx Xxxxxx as the initial Vice-Chairman. The Chairman
of the Management Committee shall preside at all meetings
of the Management Committee, and shall have such other
duties and responsibilities as may be assigned by the
Management Committee from time to time. The Vice-
Chairman of the Management Committee, in the absence or
inability of the Chairman to act, shall preside in the
Chairman's place at all meetings of the Management
Committee. The Vice-Chairman shall have such other
duties and responsibilities as may be assigned by the
Management Committee .
3.3 MEETINGS. Meetings of the Management
Committee may be called by either the Chairman or Vice-
Chairman of the Management Committee by written notice
designating the time and place of the meeting sent to
each representative not fewer than five (5) nor more than
ten (10) days before the date of the meeting to the
address of the Member appointing such representative. If
no place is designated, then the meeting shall be held at
the Company's principal place of business. If all of the
representatives to the Management Committee meet at any
time and place, the meeting shall be valid without call
or notice and any lawful action may be taken at such
meeting.
3.4 QUORUM. The presence of at least one (1)
representative appointed each by KLT and by Dobell at a
duly called meeting shall constitute a quorum at any
meeting of the Management Committee.
3.5 VOTING. The respective representatives of KLT
and Dobell to the Management Committee each shall possess
a percentage of all of the voting rights of the
Management Committee in proportion to the Voting Rights
held by the Member which appointed them, each such
Member's Management Committee voting rights which may be
exercised by any one representative appointed by such
Member as agreed upon among such Member's
representatives. If a quorum is present, the affirmative
vote of fifty-one percent (51%) or more of the voting
rights of the Management Committee shall be the act of
the Management Committee.
3.6 ACTION WITHOUT A MEETING. Any action which is
required or permitted to be taken at a meeting of the
Management Committee may be taken without a meeting,
without prior notice and without a vote, if a consent in
writing, setting forth the actions so taken, is signed by
each of the representatives to the Management Committee
and filed with the Company.
3.7 TELEPHONE MEETINGS. Representatives of the
Management Committee may participate in a meeting of the
Management Committee by means of conference telephone or
other similar communication equipment whereby all persons
participating in the meeting can hear each other.
Participation in the meeting in this manner constitutes
presence in person at the meeting.
3.8 WAIVER OF NOTICE. Whenever any notice is
required to be given to any representative to the
Management Committee, a waiver of the notice in writing
signed by the person entitled to the notice, whether
before, at or after the time stated therein, and
delivered to the Company for inclusion in the minutes or
filing with the Company's records, shall be deemed
equivalent to the giving of such notice.
3.9 SALARY AND EXPENSES. Representatives serving
on the Management Committee, as such, shall not receive
any stated salary for their services, but by resolution
of the Management Committee may receive expenses of
attendance at each meeting of the Management Committee.
3.10 OPERATING BUDGETS. No later than sixty (60)
days prior to the end of the then current fiscal year,
and thirty (30) days prior to the end of each quarter,
the Management Committee shall prepare and adopt annual
and quarterly operating budgets for the Company which
shall be submitted for approval by the unanimous
affirmative vote or unanimous consent of all of the
Members with Voting Rights. Upon such approval, no
action or failure to act which would constitute a
material change from any item in an approved annual or
quarterly budget shall be made or caused by the Company
without the prior affirmative unanimous vote or unanimous
consent of all of the Members with Voting Rights. Each
annual and quarterly budget shall include the following:
(a) A narrative description of any activities
proposed to be undertaken during the period subject
of such budget;
(b) A projected annual income statement
(accrual basis) for such period;
(c) A projected balance sheet as of the end
of the period;
(d) A schedule of projected cash flow
(including itemized operating revenues, costs, and
expenses) for such period; and
(e) A description of any proposed investments
in business ventures, including projected dates for
commencement and completion of such investments, as
well as the description of the additional loans
required by the Company from KLT to undertake and
fund the initial twenty-four (24) months of
operations of such ventures, and any other
contemplated or existing financing activities for
such period.
3.11 LIMITATION ON POWERS OF MANAGEMENT COMMITTEE.
Notwithstanding any other such provisions of this LLC
Agreement, neither the Management Committee nor the
Manager without the unanimous affirmative vote or
unanimous consent of all of the Members with Voting
Rights, or such lesser vote or consent as otherwise
provided in this LLC Agreement, may:
(a) Amend this LLC Agreement or the
Certificate of Formation of the Company;
(b) Take any action or fail to take any
action in contravention of this LLC Agreement;
(c) Admit any substitute or additional
Members except as provided in Article 11 of this
LLC Agreement;
(d) Modify a Member's or Economic Interest
Owner's obligation to make a Capital Contribution;
(e) Merge or consolidate or agree to merge or
consolidate the Company with or into any other
entity;
(f) Sell, exchange, lease, mortgage, pledge
or otherwise dispose of all or substantially all of
the property of the Company in a single transaction
or series of related transactions which in
aggregate exceed one hundred thousand dollars
($100,000);
(g) Approve any non-budgeted expenditure in
an amount in excess of one hundred thousand dollars
($100,000);
(h) Assume, incur or guarantee or become
liable for any indebtedness or borrowed money on
behalf of the Company in excess of one hundred
thousand dollars ($100,000) in the aggregate
outstanding at any time;
(i) Make or cause the Company to become a
party to any contract or commitment or renew,
extend or amend or modify any contract or
commitment, unless such contract or commitment is
entered into in the ordinary course of business;
(j) Invest in or acquire any interest in any
business enterprise or venture;
(k) Make any distributions to the Members or
Economic Interest Owners, except as otherwise
provided for in this LLC Agreement; or
(l) Transact any business other than that
which is consistent with the purpose and business
of the Company as described in Section 1.3 above.
3.12 DUTIES OF MANAGER. The Manager shall be
responsible for the management of the day to day business
and affairs of the Company in accordance with the annual
and quarterly budgets adopted by the Management Committee
and as otherwise directed by the Management Committee
from time to time. Any decision or act of the Manager
within the scope of the Manager's authority granted
hereunder shall control and bind the Company. The
Manager shall discharge his duties in good faith, with
the care an ordinarily prudent person in a like position
would exercise under similar circumstances, and in a
manner the Manager reasonably believes to be in the best
interests of the Company. The rights and duties of the
Manager shall include, without limitation:
(a) Control of the operations of the Company;
(b) Carrying out and affecting all directions
of the Management Committee;
(c) Providing for the accounting function for
the Company;
(d) Applying for and obtaining all
appropriate insurance coverage;
(e) Temporary investment of the Company's
funds and short-term investments providing for
appropriate safety of principal;
(f) Investigating additional sources of
financing for the Company;
(g) Engaging in any kind of activity and
performing and carrying out all contracts of any kind
necessary to, in connection with or incidental to the
accomplishment of the purposes and business of the
Company, so long as said activities and contracts are in
the ordinary course of business; and
(h) Negotiate, execute and perform all
agreements, and exercise all rights and remedies of
the Company in connection with the foregoing.
3.13 REMOVAL OR RESIGNATION OF MANAGER. In the
event representatives to the Management Committee
possessing fifty-one percent (51%) or more of the voting
rights of the Management Committee are at any time, or
from time to time, dissatisfied with the Manager's
performance under this Agreement (regardless of whether
such dissatisfaction shall constitute legal "cause" for
termination), such representatives shall have the right
to remove such Manager. A Person who has been removed as
Manager shall continue to be a Member or Economic
Interest Owner for all other purposes of this Agreement,
if the Manager is also a Member or Economic Interest
Owner in the Company.
A Manager of the Company may resign at any
time by giving sixty (60) days advance written notice to
each of the representatives to the Management Committee.
The resignation of a Manager shall take effect sixty
(60) days from the date of the notice or at such later
time as shall be specified in the notice and, unless
otherwise specified in the notice, the acceptance of the
resignation shall not be necessary to make it effective.
The resignation of a Manager who is also a Member or
Economic Interest Owner shall not affect the Manager's
rights as a Member or Economic Interest Owner and shall
not constitute a withdrawal of the Member or Economic
Interest Owner from the Company.
Any vacancy created in the Manager position by
the removal or resignation of a Manager shall be filled
by the unanimous affirmative vote of all of the
representatives to the Management Committee at a duly
called and held meeting of the Management Committee.
3.14 COMPENSATION OF MANAGER. The compensation of
the Manager shall be fixed from time to time by the
Management Committee, and no Manager shall be prevented
from receiving any such compensation because the Manager
is also a Member or Economic Interest Owner of the
Company.
3.15 RESTRICTIONS ON THE MEMBERS. No Member or
Economic Interest Owner individually shall have the
authority to do any binding act on behalf of the Company
without the approval of the Members as provided in this
LLC Agreement.
3.16 MEMBERS' OBLIGATION TO APPROVE ALTERNATIVE
FUNDING TO KLT LOANS. If the Manager identifies one or
more sources of debt financing which, in the reasonable
opinion of the Members with Voting Rights, is less costly
to the Company and otherwise meets its funding objectives
at least as well as the KLT Loans, the Members shall vote
or otherwise approve such debt financing and cause the
Company to use the proceeds to repay the outstanding KLT
Loans and accrued but unpaid KLT Loan Interest.
ARTICLE 4
RIGHTS AND OBLIGATIONS OF MEMBERS
4.1 LIMITATION OF LIABILITY. Each Member's and
Economic Interest Owner's liability shall be limited as
set forth in this LLC Agreement, the Delaware Act and
other applicable law.
4.2 COMPANY LIABILITIES. A Member or Economic
Interest Owner will not be personally liable for any
debts or losses of the Company beyond the Member's or
Economic Interest Owner's respective capital
contributions and any obligation of the Members and
Economic Interest Owners to make Capital Contributions,
except as required by law.
4.3 PRIORITY AND RETURN OF CAPITAL. Except as
otherwise expressly provided in this LLC Agreement, no
Member or Economic Interest Owner shall have priority
over any other Member or Economic Interest Owner, either
for the return of Capital Contributions or for Net
Profits, Net Losses or distributions; provided that this
Section shall not apply to loans (as distinguished from
Capital Contributions) which a Member has made to the
Company.
4.4 LIABILITY OF A MEMBER OR ECONOMIC INTEREST
OWNER TO THE COMPANY. A Member or Economic Interest
Owner who rightfully receives a return in whole or in
part of its Capital Contribution is liable to the Company
only to the extent now or hereafter provided by the
Delaware Act.
4.5 INDEPENDENT ACTIVITIES. Except as may
otherwise be agreed upon in writing between the Company
and a Member or Economic Interest Owner, each Member or
Economic Interest Owner shall be required to devote only
such time to the affairs of the Company as such Member or
Economic Interest Owner determines in its sole
discretion, and each such Member or Economic Interest
Owner shall be free to serve any other Person in any
capacity that it may deem appropriate in its discretion;
provided, however that no Member or Economic Interest
Owner shall either directly or indirectly engage in any
activities which in any way concern or are related to the
license, sale, provision, use or marketing of products,
services or activities which are licensed, sold,
provided, used or marketed by the Company, or which
activities otherwise are competitive with the Company,
without first acquiring the written approval of each of
the representatives of Management Committee not appointed
by the Member or Economic Interest Owner requesting or
requiring such approval.
ARTICLE 5
MEETINGS OF MEMBERS
5.1 ANNUAL MEETING. The annual meeting of the
Members shall be held on the second Tuesday in April or
at such other time as shall be determined by the Members
for the purpose of the transaction of such business as
may come before the meeting.
5.2 SPECIAL MEETINGS. Special meetings of the
Members, for any purpose or purposes, unless otherwise
prescribed by statute, may be called by any Member or
Members holding at least one-fifth (1/5) of all Voting
Rights held by the Members.
5.3 PLACE OF MEETINGS. The Members may designate
any place, either within or outside the state of
Delaware, as the place of meeting for any meetings of the
Members. If no designation is made, or if a special
meeting be otherwise called, the place of meeting shall
be the principal place of business of the Company.
5.4 NOTICE OF MEETINGS. Except as provided in
Section 5.5 below, for any annual meeting held at such
time as provided in Section 5.1 above, and for all
special meetings, written notice stating the place, day,
and hours of the meeting and the purpose or purposes for
which the meeting is called shall be delivered not fewer
than ten (10) nor more than sixty (60) days before the
date of the meeting, either personally or by mail, by or
at the direction of the Members calling the meeting, to
each Member entitled to vote at the meeting. If mailed,
the notice shall be deemed to be delivered two (2)
calendar days after being deposited in the United States
mail, addressed to the Member at the Member's address as
it appears on the books of the Company, with postage
thereon prepaid.
5.5 MEETING OF ALL MEMBERS. If all of the Members
shall meet at any time and place, either within or
outside of the state of Delaware, and consent to the
holding of a meeting at that time and place, the meeting
shall be valid without call or notice, and at the meeting
lawful action may be taken.
5.6 RECORD DATE. For the purpose of determining
Members entitled to notice of or to vote at any meeting
of Members or any adjourned meeting, the date on which
notice of the meeting is mailed shall be the record date
for the determination of Members. When a determination of
Members entitled to vote at any meeting of Members has
been made as provided in this Section, the determination
shall apply to any adjourned meeting.
5.7 QUORUM. Members holding at least two-thirds
(b) of the Voting Rights held by the Members, represented
in person or by proxy, shall constitute a quorum at any
meeting of Members. In the absence of a quorum at any
meeting of Members, the Members holding all of the Voting
Rights so represented may adjourn the meeting from time
to time for a period not to exceed sixty (60) days
without further notice. However, if the adjournment is
for more than sixty (60) days, or if after the
adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given
to each Member of record entitled to vote at the meeting.
At any adjourned meeting at which a quorum shall be
present or represented, any business may be transacted
which might have been transacted at the meeting as
originally noticed.
5.8 VOTING. If a quorum is present, the
affirmative vote of the Members holding a Majority in
Interest shall be the act of the Members, unless the vote
of a greater proportion or number is required by this LLC
Agreement, the Company's Certificate of Formation or the
Delaware Act. Unless otherwise expressly provided in
this LLC Agreement or required under applicable law,
Members who have an interest (economic or otherwise) in
the outcome of any particular matter upon which the
Members vote or consent, their Voting Rights shall be
counted in the determination of whether the requisite
matter was approved by the Members.
5.9 PROXIES. At all meetings of Members a Member
may vote in person or by proxy executed in writing by the
Member or a duly authorized attorney-in-fact. The proxy
shall be delivered to any one (1) or more of the
remaining Members before or at the time of the meeting.
No proxy shall be valid after three (3) years from the
date of its execution, unless otherwise provided in the
proxy.
5.10 ACTION BY MEMBERS WITHOUT A MEETING. Any
action required or permitted to be taken at a meeting of
Members may be taken without a meeting if the action is
evidenced by one or more counterparts of a written
consent describing the action taken and signed by each
Member entitled to vote, which consent shall be included
in the minutes or filed with the Company records. Action
taken under this Section is effective when all Members
entitled to vote have signed the consent, unless the
consent specifies a different effective date. The record
date for determining Members entitled to take action
without a meeting shall be the date the first Member
signs a written consent.
5.11 WAIVER OF NOTICE. When any notice is required
to be given to any Member, a waiver of the notice in
writing signed by the person entitled to the notice,
whether before, at, or after the given time stated
therein, and delivered to the Company for inclusion in
the minutes or filing with the Company records, shall be
equivalent to the giving of the notice. A Member's
attendance at any meeting shall constitute a waiver: (i)
to lack of notice or defective notice of the meeting,
unless the Member at the beginning of the meeting objects
to the holding of the meeting or transacting business at
the meeting; and (ii) to consideration of a particular
matter at the meeting that is not within the purpose or
purposes described in the meeting notice, unless such
person objects to considering the matter when it is
presented.
5.12 CHAIRPERSON OF MEETING; DESIGNATION OF
AUTHORIZED REPRESENTATIVES. Each meeting of Members
shall be conducted by the Manager or such other Person as
the Manager may appoint pursuant such rules for the
conduct of the meeting as the Manager or such other
Person deems appropriate. Each Member shall designate to
the Manager, in writing, one (1) authorized
representative of the Member who will vote or consent on
all matters under this LLC Agreement for such Member.
Such designation will continue until revoked in writing.
Within thirty (30) days of the execution of this
Agreement, the Members shall designate their initial
authorized representative.
ARTICLE 6
CAPITAL CONTRIBUTIONS
6.1 INITIAL CAPITAL CONTRIBUTIONS. A Capital
Account shall be maintained for each Member as provided
in Section 2.1(b) above, which shall include the initial
Capital Contribution of each Member as set forth on
EXHIBIT A. The initial Percentage Interest of each
Member shall be as also set forth in EXHIBIT A. No
Member shall have any interest or rights in the capital
contributed by any other Member.
6.2 INCREASE IN COMPANY CAPITAL. The Members and
Economic Interest Owners recognize that the Company may
require additional capital from time to time in order to
accomplish the purposes and the business for which the
Company is formed. If all of the Members with Voting
Rights by an affirmative and unanimous vote or unanimous
consent determine in good faith that additional Capital
Contributions are necessary for the operation of the
Company, each Member and Economic Interest Owner shall,
within thirty (30) days of such vote or consent,
contribute their respective share of the additional
contribution to the capital of the Company as determined
pursuant to such unanimous affirmative vote or unanimous
consent, which share shall be determined on a pro rata
basis with reference to the relationship of each
respective Member's or Economic Interest Owner's
Percentage Interest to the total of the Percentage
Interests of all of the Members and Economic Interest
Owners. The Manager shall make such determination and
provide notice to each Member and Economic Interest Owner
within ten (10) days of such vote or consent of the call
for such additional contribution, the amount to be
contributed by such Person, and the date which such
contribution is due. Unless otherwise agreed to by the
affirmative vote or consent of a Majority in Interest,
all such additional Capital Contributions shall be made
in cash. No voluntary contributions to capital shall be
made by any Member or Economic Interest Owner absent the
affirmative vote or consent of a Majority in Interest.
A Member who, as provided for under this LLC Agreement,
has transferred any portion of its Economic Interest but
has retained any Voting Rights shall be jointly and
severally responsible together with the Person to whom
such Economic Interest was transferred for any additional
Capital Contributions to be made with respect to such
Economic Interest under this Section 6.2 and, if such
additional contribution is not made, shall be deemed a
Non-Contributing Person as provided for in Section 6.3
below for all purposes, including without limitation,
determining a relinquishment of Voting Rights.
6.3 FAILURE TO CONTRIBUTE.
(a) If any Member or Economic Interest Owner
(a "Non-Contributing Person") fails to contribute
its portion of the amount of the additional Capital
Contribution called by the Members in accordance
with Section 6.2 above, then the following shall
occur: (i) the Company shall have the right to
obtain the additional Capital Contribution not made
by the Non-Contributing Person from the other
Members and Economic Interest Owners; (ii) the Non-
Contributing Person shall relinquish all of its
Voting Rights, if any, unless and until it has made
its Cure Contribution (as defined below) in full;
and (iii) the Company and the other Members and
Economic Interest Owners shall have all other
rights set forth in this Section 6.3.
Thereupon, the other Members and Economic
Interest Owners shall have the right, but not the
obligation, to contribute on a pro rata basis
determined with reference to the relationship of
each respective other Member's or Economic Interest
Owner's Percentage Interest to the total Percentage
Interests of all of such other Members and Economic
Interest Owners, unless a different allocation is
agreed upon among them, any portion of the
additional Capital Contribution not contributed by
the Non-Contributing Person, and each such Member
or Economic Interest Owner shall deliver to the
Company such amount not later than ten (10) days
following the expiration of the thirty (30) day
period referenced above. All such Capital
Contributions made by Members and Economic Interest
Owners pursuant to this Section 6.3, shall be
credited to the Capital Account of the Member or
Economic Interest Owner making the Capital
Contribution.
A Member or Economic Interest Holder who was
not a Non-Contributing Person with respect to any
such capital call shall not be deemed a Non-
Contributing Person (and shall not relinquish any
Voting Rights) by reason of such Member or Economic
Interest Owner choosing not to participate in
additional contributions to make up for the share
not contributed by the Non-Contributing Person;
provided, however, that if the Members or Economic
Interest Owners which elect to contribute the funds
not contributed by the Non-Contributing Person do
not contribute the entire amount of such funds not
contributed by the Non-Contributing Person, then
the Members may initiate a new capital call on all
of the Members and Economic Interest Owners
pursuant to the terms of Section 6.2 above for the
additional capital required by the Company, and any
Member or Economic Interest Owner who fails to fund
its share of that new capital call (in accordance
with its Percentage Interest) shall be deemed a
Non-Contributing Person with respect to such new
capital call for purposes hereof.
(b) For purposes hereof, in the event of a
capital call in which there is at least one Non-
Contributing Person, all of the Capital
Contributions made by Members or Economic Interest
Owners pursuant to such capital call (including
their initial shares of the capital call and any
additional capital contributed by reason of the
failure of a Non-Contributing Person to make a
Capital Contribution) shall be deemed "Preference
Contributions." A "Preference Contribution
Account," which shall be a memorandum account,
shall be maintained for each Member and Economic
Interest Owner. Each Member's and Economic
Interest Owner's Preference Contribution Account
shall have an initial balance of zero and be
increased by (i) an amount equal to one hundred
twenty-five percent (125%) of each Preference
Contribution made by such Member or Economic
Interest Owner (as of the time of such Preference
Contribution) and (ii) an amount equal to a return
on the balance of such Preference Contribution
Account balance, from time to time, at the rate of
fifteen percent (15%) per annum (the daily portion
of which shall be deemed added to the Preference
Contribution Account on a daily basis); and
decreased (but not below zero) by each distribution
made to such Member or Economic Interest Owner
pursuant to Sections 6.3(c), 8.1 or 12.7(d) hereof
(in each case, as of the time of such
distribution).
(c) A Non-Contributing Person shall have the
right, at any time, to cure its failure in the
making of a required Capital Contribution by making
a cash Capital Contribution ("Cure Contribution")
to the Company in the amount ("Cure Contribution
Amount") equal to one hundred twenty-five percent
(125%) of each amount of additional Capital
Contribution which it has failed to make plus, in
each case, an amount equal to a return from the
date of such failure at fifteen percent (15%) per
annum on the amount of the balance of each Member's
and Economic Interest Owner's Preference
Contribution Account balance attributable to the
required Capital Contribution being cured. Upon its
receipt of the Cure Contribution, the Company shall
immediately distribute that portion of the Cure
Contribution among the Members and Economic
Interest Owners in such relative amounts as are
necessary in order to cause the balances of the
Preference Contribution Accounts of the Members and
Economic Interest Owners to be in, or as close as
possible to, the same ratio as their relative
Percentage Interests. For purposes hereof, a Cure
Contribution shall be treated as a "Preference
Contribution" by the Non-Contributing Person. Only
the amount of the required Capital Contribution
(and not the amount of the Preference Contribution)
shall be credited to the Capital Account of the
Non-Contributing Person.
(d) None of the terms, covenants, obligations
or rights contained in Section 6.2 and this Section
6.3 are or shall be deemed to be for the benefit of
any Person or entity other than the Members,
Economic Interest Owners, and the Company, and no
such third person shall under any circumstances
have any right to compel any actions or payments by
the Members or Economic Interest Owners.
(e) Any material breach or violation by a
Member (including a Member possessing only Voting
Rights as provided for under this LLC Agreement) or
Economic Interest Owner of any warranty,
representation, covenant, or indemnification
obligation contained in this LLC Agreement will
result in such Member or Economic Interest Owner
being deemed a Non-Contributing Person by reason of
a failure to make an additional Capital
Contribution in the amount of the damages incurred
by the Company by reason of such breach or
violation. If the deemed Non-Contributing Person
fails to cure such breach or violation to the
satisfaction of the Management Committee within
thirty (30) days after its receipt of notice of
such breach or violation from the Management
Committee, the deemed Non-Contributing Person shall
relinquish all Voting Rights, and the Preference
Contribution Accounts of the remaining Members and
Economic Interest Owners will be increased (on a
pro rata basis with reference to the relationship
of each respective Member's or Economic Interest
Owner's Percentage Interest to the total of all
such Members and Economic Interest Owner's
Percentage Interests) by (i) an amount equal to one
hundred twenty-five percent (125%) of such damages
as determined by the Management Committee; and (ii)
an amount equal to a return thereon at the rate of
fifteen percent (15%) per annum (the daily portion
of which shall be deemed added to the Preference
Contribution Account on a daily basis).
Thereafter, the deemed Non-Contributing Person may
cure such breach or violation by making a Cure
Contribution, the amount and disposition of which
shall be governed by Section 6.3 (c) above;
provided, however, that should it ultimately be
determined by the affirmative vote or consent of a
Majority in Interest or by a court of competent
jurisdiction that any such damages were not
attributable to a breach or violation of this LLC
Agreement by such deemed Non-Contributing Person,
such deemed Non-Contributing Person shall
immediately be reinvested with any and all Voting
Rights lost on account the operation of this
subparagraph (e) and any economic consequences of
the tentative operation of this subparagraph (e) on
the Non-Contributing Person (such as a loss of
distributions or payment by such Non-Contributing
Person of any Cure Contribution or other payment in
respect of such alleged breach or violation) shall
be properly reversed.
6.4 CAPITAL ACCOUNTS OF MEMBERS. The amount of
any additional Capital Contribution made by any Member or
Economic Interest Owner shall be added to the Capital
Account of such contributing Member or Economic Interest
Owner as of the date of expiration of the thirty (30) day
periods and/or ten (10) day period, as the case may be,
set out in Sections 6.2 and 6.3 (a) above. Any increase
in a Member's or Economic Interest Owner's Preference
Contribution Account pursuant to Section 6.3(e) shall not
be added to such Member's or Economic Interest Owner's
Capital Account.
6.5 ADJUSTMENT OF PERCENTAGE INTERESTS. If
additional Capital Contributions are made in accordance
with Sections 6.2 and 6.3 above, or in conjunction with
the admission of a new Member pursuant to Article 11 of
this LLC Agreement, the Percentage Interests of each
Member and Economic Interest Owner shall be adjusted to
reflect such additional contributions in accordance with
the following formula:
(a) Each Member's and Economic Interest
Owner's Percentage Interest shall be adjusted to
the same ratio as the Member's or Economic Interest
Owner's total Capital Contribution (initial Capital
Contribution plus additional Capital Contributions)
bears to the total Capital Contributions of all the
Members and Economic Interest Owners as of the
adjustment date. The adjustment date shall be the
date of the expiration of the thirty (30) day
period and/or ten (10) day period, as the case may
be, set out in Sections 6.2 and 6.3 (a) above or
the date a new Member is admitted, as the case may
be.
(b) This Percentage Interest adjustment shall
be made after every additional Capital
Contribution, whether such additional Capital
Contribution is the result of the admission of a
new Member or a call for additional contributions.
In the event that there is any transfer in whole
or in part, of a Member's or Economic Interest
Owner's Percentage Interest in the Company, then
the transferee of such Member or Economic Interest
Owner shall stand in the same position as the
Member or Economic Interest Owner whose interest
they have acquired, unless all of the Members have
agreed otherwise.
6.6 INTEREST AND OTHER AMOUNTS. No Member or
Economic Interest Owner shall receive any interest,
salary, or drawing with respect to its Capital
Contributions or its Capital Account or for services
rendered to or on behalf of the Company or otherwise in
its capacity as a Member or Economic Interest Owner,
except as otherwise provided in this LLC Agreement or
other agreement approved and ratified by all of the
Members between the Company and such Member or Economic
Interest Owner.
6.7 AMENDMENT OF DOCUMENTS. Except as provided
above or pursuant to a Member's or Economic Interest
Owner's acquisition of an additional Economic Interest as
permitted under this LLC Agreement, any adjustments in
Percentage Interests and/or Voting Rights shall be
effectuated by amending this LLC Agreement and the
execution and filing of any other documents required by
the Delaware Act.
6.8 LOANS OF MEMBERS. A Member or Economic
Interest Owner may loan cash or other property to the
Company, should additional funds be required, upon such
terms as all of the Members with Voting Rights shall
agree by an affirmative and unanimous vote or consent.
Loans by any Member or Economic Interest Owner to the
Company shall not be considered as contributions to the
capital of the Company. Except as otherwise provided in
this LLC Agreement, none of the Members or Economic
Interest Owners shall be obligated to make any loan or
advance to the Company.
6.9 WITHDRAWAL OF CAPITAL CONTRIBUTION. Except as
otherwise provided in this LLC Agreement, the unanimous
affirmative vote or unanimous consent of all of the
Members with Voting Rights shall be required to modify,
compromise or release the amount and/or character of a
Member's or Economic Interest Owner's Capital
Contribution, or any promise made by a Member as
consideration for the acquisition of an interest in the
Company. Under circumstances requiring the return of any
Capital Contribution, no Member or Economic Interest
Owner shall have the right to receive any property of the
Company, other than cash, except as may be specifically
provided herein.
6.10 KLT LOAN. KLT will make loans to the Company
from time to time pursuant to this Agreement (each such
loan a "KLT Loan").
The KLT Loans, which shall be drawn upon by the
Company as needed from time to time, shall be in the
principal amount of Four Million dollars ($4,000,000.00),
shall bear interest at the prime rate as published by the
WALL STREET JOURNAL plus three percent (3%) per annum on
the principal balance outstanding from time to time which
rate shall be adjusted monthly on the first day of each
month (the "KLT Loan Interest"), and shall be evidenced
by and subject to such other terms and conditions as set
forth in a Promissory Note in the form attached hereto as
EXHIBIT B. The accrued but unpaid KLT Loan Interest and
principal balance of the KLT Loans shall be repaid from
distributions of the Company's Net Cash Flow and/or
distributions of the Company's assets, which such
repayment shall be given priority over any such
distributions to the Members or Economic Interest Owners
on account of their contributions of capital to the
Company.
If KLT fails to make a KLT Loan to the Company as
required hereunder, then, until such time that it makes
such loan: (i) KLT shall relinquish all Voting Rights,
and any right to preferential distributions as described
in 8.1(c) below; and (ii) Dobell shall have the right and
authority to enter into a purchase and sale agreement on
behalf of KLT for the sale of KLT's Economic Interest and
Voting Rights (which may be exercised only if the
transferee is admitted as a Member as provided in this
LLC Agreement); provided, however, that: (A) Dobell shall
provide KLT not less than fifteen (15) days notice of its
exercise of such right and authority; (B) KLT shall be
provided an opportunity to cure such failure to make the
KLT Loan within such fifteen (15) days; and (C) the
purchase price paid to KLT upon the closing of such
purchase and sale agreement shall be payable in cash and
shall be an amount equal to or greater than the sum of
(i) all Capital Contributions made by KLT, less any
previous returns to KLT of its Capital Contributions,
(ii) KLT's share of any undistributed Net Cash Flow,
(iii) the outstanding balance of any KLT Loans, and (iv)
any accrued but unpaid KLT Loan Interest.
Notwithstanding the foregoing, KLT shall not under
any circumstances be required to fund a KLT Loan and it
shall not relinquish any rights or subject its Economic
Interest and Voting Rights to possible sale if, in KLT's
reasonable opinion, it has determined that the
operational and financial objectives of the Company
(and/or its business ventures, as the case may be) as set
forth in EXHIBIT C, attached hereto, as conditions
precedent to such KLT Loan have not been met; PROVIDED,
HOWEVER, that KLT shall be obligated to fund a KLT Loan
for the purpose of the Company fulfilling its obligations
under any severance agreement with a Company employee,
irrespective of whether the objectives in EXHIBIT C have
been met.
The KLT Loans shall be secured by a first
priority lien granted by the Company upon all of its
property pursuant to a Security Agreement in the form
attached hereto as EXHIBIT D. If KLT so requests, the
Company shall execute and deliver to KLT such further
collateral documents as KLT may reasonably request from
time to time to create and perfect the security interest
contemplated by the Security Agreement.
SECTION 7
ALLOCATIONS
7.1 NET PROFITS. After giving effect to the
special allocations set forth in this Article 7, Net
Profits for any fiscal year shall be allocated among the
Members and Economic Interest Owners as follows and in
the following order of priority:
(a) First, to the Members and Economic
Interest Owners with negative Adjusted Capital
Account Balances (if any), in the ratio of such
negative Adjusted Capital Account Balances, up to
the amount necessary to restore all such Adjusted
Capital Account Balances to zero;
(b) Next, to the Members and Economic
Interest Owners with positive Preference
Contributions Account balances, in the ratio of
their respective Preference Contributions Account
balances, up to the aggregate amount (if any)
necessary so that each such Member or Economic
Interest Owner will have a positive Adjusted
Capital Account Balance in an amount which is not
less than its Preference Contributions Account
balance;
(c) Next, to the Members and Economic
Interest Owners in the relative amounts, and up to
the aggregate amount (if any), necessary so that
the Residual Capital Account Balances of the
Members and Economic Interest Owners will be in the
ratio of their respective Percentage Interests; and
(d) Then, any additional Net Profits shall be
allocated among the Members and Economic Interest
Owners in proportion to their Percentage Interests.
7.2 NET LOSSES. Net Losses for any fiscal year
shall be allocated among the Members and Economic
Interest Owners as follows and in the following order of
priority:
(a) First, to the Members and Economic
Interest Owners, in the relative amounts, and up to
the aggregate amount (if any), necessary so that
their Residual Capital Account Balances (if any)
will be in the ratio of their respective Percentage
Interests;
(b Next, to the Members and Economic
Interest Owners, in the ratio of their Residual
Capital Account Balances, up to the aggregate
amount (if any) necessary to reduce such Residual
Capital Account Balances to zero;
(c Next, to the Members and Economic
Interest Owners with positive Adjusted Capital
Account Balances, up to the aggregate amount (if
any) necessary to reduce such Adjusted Capital
Account Balances to zero; and
(d Then, any remaining Losses shall be
allocated among the Members and Economic Interest
Owners in proportion to their Percentage Interests.
7.3 SPECIAL ALLOCATIONS. The following special
allocations shall be made in the following order:
(a Except as otherwise provided in Section
1.704-2(f) of the Regulations, notwithstanding any
other provision of this Article 7, if there is a
net decrease in Company Minimum Gain during any
Company fiscal year, each Member or Economic
Interest Owner shall be specially allocated items
of Company income and gain for such Fiscal year
(and, if necessary, subsequent Fiscal years) in an
amount equal to such Member's or Economic Interest
Owner's share of the net decrease in Company
Minimum Gain, determined in accordance with
Regulations Section 1.704-2(g). Allocations
pursuant to the previous sentence shall be made in
proportion to the respective amounts required to be
allocated to each Member or Economic Interest Owner
pursuant thereto. The items to be so allocated
shall be determined in accordance with Sections
1.704-2(f)(6) and 1.704-2(j)(2) of the Regulations.
This Section 7.3(a) is intended to comply with the
minimum gain chargeback requirement in Section
1.704-1(f) of the Regulations and shall be
interpreted consistently therewith.
(b Except as otherwise provided in Section
1.704-1(i)(4) of the Regulations, notwithstanding
any other provision of this Article 7, if there is
a net decrease in Member Nonrecourse Debt Minimum
Gain attributable to a Member Nonrecourse Debt
during any Company fiscal year, each Member or
Economic Interest Owner who has a share of the
Member Nonrecourse Debt Minimum Gain attributable
to such Member Nonrecourse Debt, determined in
accordance with Section 1.704-2(i)(5) of the
Regulations, shall be specially allocated items of
Company income and gain for such fiscal year (and,
if necessary, subsequent fiscal years) in an amount
equal to such Member's or Economic Interest Owner's
share of the net decrease in Member Nonrecourse
Debt Minimum Gain attributable to such Member
Nonrecourse Debt, determined in accordance with
Regulations Section 1.704-2(i)(4). Allocations
pursuant to the previous sentence shall be made in
proportion to the respective amounts required to be
allocated to each Member or Economic Interest Owner
pursuant thereto. The items to be so allocated
shall be determined in accordance with Sections
1.704-2(i)(4) and 1.704-2(j)(2) of the Regulations.
This Section 7.3(b) is intended to comply with the
minimum gain chargeback requirement in Section
1.704-2(i)(4) of the Regulations and shall be
interpreted consistently therewith.
(c Nonrecourse Deductions for any Fiscal
year shall be specially allocated among the Members
and Economic Interest Owners in proportion to their
Percentage Interests.
(d Any Member Nonrecourse Deductions for any
Fiscal year shall be specially allocated to the
Member or Economic Interest Owner who bears the
economic risk of loss with respect to the Member
Nonrecourse Debt to which such Member Nonrecourse
Deductions are attributable in accordance with
Regulations Section 1.704-2(i)(1).
(e To the extent an adjustment to the
adjusted tax basis of any Company asset pursuant to
Code Section 734(b) or Code Section 743(b) is
required, pursuant to Regulations Section
1.704-1(b)(2)(iv)(m)(2) or Regulations Section
1.704-1(b)(2)(iv)(m)(4), to be taken into account
in determining Capital Accounts as the result of a
distribution to a Member or Economic Interest Owner
in complete liquidation of its interest in the
Company, the amount of such adjustment to the
Capital Accounts shall be treated as an item of
gain (if the adjustment increases the basis of the
asset) or loss (if the adjustment decreases such
basis) and such gain or loss shall be specially
allocated to the Member or Economic Interest Owners
in accordance with their interests in the Company
in the event Regulations Section
1.704-1(b)(2)(iv)(m)(2) applies, or to the Members
and Economic Interest Owners to whom such
distribution was made in the event Regulations
Section 1.704-1(b)(2)(iv)(m)(4) applies.
7.4 OTHER ALLOCATION RULES.
(a The Members and Economic Interest Owners
are aware of the income tax consequences of the
allocations made by this Article 7 and hereby agree
to be bound by the provisions of this Article 7 in
reporting their shares of Company income and loss
for income tax purposes.
(b For purposes of determining the Net
Profits, Net Losses, or any other items allocable
to any period, Net Profits, Net Losses, and any
such other items shall be determined on a daily,
monthly, or other basis, as determined by a
Majority in Interest using any permissible method
under Code Section 706 and the Regulations
thereunder.
(c Solely for purposes of determining a
Member's or Economic Interest Owner's proportionate
share of the "excess nonrecourse liabilities" of
the Company, within the meaning of Regulations
Section 1.752-3(a)(3), the Members' and Economic
Interest Owners' interests in Company Net Profits
are in proportion to their Percentage Interests.
(d To the extent permitted by Section
1.704-2(h)(3) of the Regulations, the Members shall
endeavor not to treat distributions of Net Cash
Flow as having been made from the proceeds of a
Nonrecourse Liability or a Member Nonrecourse Debt.
7.5 TAX ALLOCATIONS: CODE SECTION 704(C). In
accordance with Code Section 704(c) and the Regulations
thereunder, income, gain, loss, and deduction with
respect to any property contributed to the capital of the
Company shall, solely for tax purposes, be allocated
among the Members and Economic Interest Owners so as to
take account of any variation between the adjusted basis
of such property to the Company for federal income tax
purposes and its initial Gross Asset Value (computed in
accordance with Section 2.1(j)(i) hereof). The Members
and Economic Interest Owners hereby agree that the
"REMEDIAL ALLOCATION METHOD" described in Regulation
Section 1.704-3(d) shall be used for allocating the
disparity between the fair market value of a contributed
asset and that asset's adjusted tax basis.
In the event the Gross Asset Value of any Company
asset is adjusted pursuant to Section 2.1(i)(ii) hereof,
subsequent allocations of income, gain, loss, and
deduction with respect to such asset shall take account
of any variation between the adjusted basis of such asset
for federal income tax purposes and its Gross Asset Value
in the same manner as under Code Section 704(c) and the
Regulations thereunder. The Members and Economic
Interest Owners agree that the remedial allocation method
described in Regulation Section 1.704-3(d) shall be used
for allocating the disparity between the fair market
value and adjusted tax basis.
Other than the mandatory use of the remedial
allocation method as specified above in this Section 7.5,
any elections or other decisions relating to such
allocations shall be made by the Management Committee in
any manner that reasonably reflects the purpose and
intention of this LLC Agreement. Allocations pursuant to
this Section 7.5 are solely for purposes of federal,
state, and local taxes and shall not affect, or in any
way be taken into account in computing, any Person's
Capital Account or share of Net Profits, Net Losses,
other items, or distributions pursuant to any provisions
of this LLC Agreement.
ARTICLE 8
ACCOUNTING, DISTRIBUTIONS AND TAXES
8.1 DISTRIBUTION OF NET CASH FLOW. Within thirty
(30) days after the close of each fiscal year and with
the affirmative vote or consent of a Majority in
Interest, or more frequently upon the unanimous
affirmative vote or unanimous consent of all Members with
Voting Rights (except for the distribution set forth in
Section 8.1(a), which shall be made without the need for
any vote), the Net Cash Flow of the Company shall be
distributed to the Members and Economic Interest Owners
as follows:
(a First, PRO RATA on a quarterly basis to
the Members and Economic Interest Owners, in
accordance with their respective Percentage
Interests, an amount of Net Cash Flow sufficient
for the Members and Economic Interest Owners to
satisfy the aggregate federal, state and local tax
liabilities of the Members and Economic Interest
Owners incurred with respect to the taxable income
of the Company during the preceding calendar
quarter.
(b Second, to KLT for repayment of any
accrued but unpaid KLT Loan Interest and then for
repayment of any outstanding principal balance of
the KLT Loans;
(c Third, to the Members and Economic
Interest Owners with positive Preference
Contribution Account balances in proportion to
their respective Preference Contribution Accounts
balances, up to the amount necessary to reduce all
such Preference Contribution Account balances to
zero;
(d Fourth, to KLT until such distributions,
together with all prior distributions of Net Cash
Flow and/or of the Company's assets, including
amounts distributed as repayments of KLT Loans, KLT
Loan Interest and returns of KLT's Capital
Contributions are such that KLT has received an
Internal Rate of Return of twenty-five percent
(25%) on all of its Capital Contributions and KLT
Loans as such amounts are outstanding from time to
time; and
(e The balance, if any, to the Members and
Economic Interest Owners in proportion to their
Percentage Interests; provided, however, that the
amount distributable to KLT under this Section
8.1(d) shall be credited by the amounts distributed
to KLT pursuant to Section 8.1(c).
For purposes of this LLC Agreement, KLT's "Internal
Rate of Return" shall be the pretax annualized percentage
discount rate at which the present value of all of KLT's
Capital Contributions and KLT Loans equal the present
value of the sum of all distributions of Net Cash Flow
and/or of the Company's assets, including amounts
distributed as repayments of KLT Loans, KLT Loan Interest
and returns of KLT's Capital Contributions. The
determination of KLT's Internal Rate of Return shall be
made by KLT at the end of each quarter of the Company's
fiscal year, or more frequently if required to determine
the rights and obligations of the parties under this LLC
Agreement, and certified by KLT to the Manager.
Notwithstanding the foregoing, no distributions
shall be made unless, after distribution is made, the
assets of the Company are in excess of its liabilities,
except amounts payable to Members or Economic Interest
Owners on account of Capital Contributions.
8.2 ACCOUNTING. The fiscal and tax year of the
Company shall be the calendar year. For tax purposes, the
records of the Company shall be maintained on an accrual
method of accounting. The books of account of the Company
shall be kept and maintained at all times at the
principal place of business of the Company. Each Member
shall have the right at all reasonable times during usual
business hours to audit, examine and make copies of or
extracts from the books of account of the Company, and a
list of the names and addresses of all of the Members and
Economic Interest Owners. Such right may be exercised
through any agent of such Member. Each Member shall bear
all expenses incurred in any examination made for its
account.
As soon as reasonably practicable after the end of
each calendar quarter, the Manager shall furnish each
Member and Economic Interest Owner with an interim
balance sheet, statement of profit and loss, and
statement of cash receipts and disbursements of the
Company, each prepared in accordance with generally
accepted accounting principles and reviewed by the
Company's independent certified public accountants. As
soon as reasonably practicable after the end of each
fiscal and tax year, the Manager shall furnish each
Member and Economic Interest Owner with: (i) a balance
sheet of the Company as of the last day of such fiscal or
tax year, a statement of profit or loss of the Company
for such year, and a statement of cash receipts and
disbursements, each prepared in accordance with generally
accepted accounting principles and reviewed by the
Company's independent certified public accountants; (ii)
a statement showing the amounts allocated to or allocated
against such Member and Economic Interest Owner pursuant
to Article 7 of this LLC Agreement during or in respect
of such year, and any items of income, deduction, credit,
or loss allocated to them; and (iii) a copy of the
federal income tax return of the Company.
8.3 TAX ELECTIONS. Upon the affirmative vote or
consent of a Majority in Interest, the Tax Matters Member
shall make any tax election for the Company allowed under
the Internal Revenue Code of 1986, as amended, including,
without limitation, elections to cause the basis of
Company property to be adjusted for federal income tax
purposes as provided by Section 734 and 743 of the
Internal Revenue Code of 1986, as amended, pursuant to
the transfer of an Economic Interest or the death of or
distribution of property to a Member or Economic Interest
Owner.
8.4 TAX MATTERS MEMBER. KLT is hereby designated
as the Tax Matters Member of the Company pursuant to
applicable provisions of the Internal Revenue Code of
1986, as amended, and the regulations thereunder. If KLT
ceases to be a Member, its status as Tax Matters Member
shall cease, and a successor Tax Matters Member shall be
as chosen by the affirmative vote or consent of a
Majority in Interest
ARTICLE 9
REPRESENTATIONS AND WARRANTIES
9.1 IN GENERAL. As of the date hereof, each
Member (each a "Representing Party") makes each of the
following representations and warranties applicable to
such Member:
(a If such Representing Party is a
corporation, partnership, trust, limited liability
company, limited liability partnership or any other
legal entity, it is duly organized or duly formed,
validly existing, and in good standing under the
laws of the jurisdiction of its incorporation or
formation and has the power and authority as an
entity to own its property and carry on its
business as owned and carried on at the date hereof
and as contemplated hereby. Such Representing
Party is duly licensed or qualified to do business
and in good standing in each of the jurisdictions
in which the failure to be so licensed or qualified
would have a material adverse effect on its
financial condition or its ability to perform its
obligations hereunder. Such Representing Party has
the power and authority as an entity to execute and
deliver this LLC Agreement and to perform its
obligations hereunder and the execution, delivery,
and performance of this LLC Agreement has been duly
authorized by all necessary actions of the
Representing Party entity. This LLC Agreement
constitutes the legal, valid, and binding
obligation of such Representing Party.
(b Neither the execution, delivery, and
performance of this LLC Agreement nor the
consummation by such Representing Party of the
transactions contemplated hereby (i) will conflict
with, violate, or result in a breach of any of the
terms, conditions, or provisions of any law,
regulation, order, writ, injunction, decree,
determination, or award of any court, any
governmental department, board, agency, or
instrumentality, domestic or foreign, or any
arbitrator, applicable to such Representing Party,
(ii) will conflict with, violate, result in a
breach of, or constitute a default under any of the
terms, conditions, or provisions of the articles of
incorporation, bylaws, partnership agreement,
certificate of formation, articles of organization,
or other formation and operating documents of such
Representing Party, or of any material agreement or
instrument to which such Representing Party is a
party or by which such Representing Party is or may
be bound or to which any of its material properties
or assets is subject, (iii) will conflict with,
violate, result in a breach of, constitute a
default under (whether with notice or lapse of time
or both), accelerate or permit the acceleration of
the performance required by, give to others any
material interests or rights, or require any
consent, authorization or approval under any
indenture, mortgage, lease agreement, or instrument
to which such Representing Party is a party or by
which such Representing Party is or may be bound,
or (iv) will result in the creation or imposition
of any lien upon any of the material properties or
assets of such Representing Party.
(c Any registration, declaration or filing
with, or consent, approval, license, permit or
other authorization or order by, any governmental
or regulatory authority, domestic or foreign, that
is required in connection with the valid execution,
delivery, acceptance and performance by such
Representing Party under this LLC Agreement or the
consummation by such Representing Party of any
transaction contemplated hereby has been completed,
made or obtained on or before the effective date of
this LLC Agreement.
(d There are no actions, suits, proceedings
or investigations pending or, to the knowledge of
such Representing Party, threatened against or
affecting such Representing Party or any of their
properties, assets, or businesses in any court or
before or by any governmental department, board,
agency, or instrumentality, domestic or foreign, or
any arbitrator which could, if adversely determined
(or, in the case of an investigation could lead to
any action, suit, or proceeding, which if adversely
determined could) reasonably be expected to
materially impair such Representing Party's ability
to perform its obligations under this LLC Agreement
or to have a material adverse effect on the
consolidated financial condition of such
Representing Party; and such Representing Party has
not received any currently effective notice of any
default, and such Representing Party is not in
default, under any applicable order, writ,
injunction, decree, permit, determination, or award
of any court, any governmental department, board,
agency or instrumentality, domestic or foreign, or
any arbitrator which could reasonably be expected
to materially impair such Representing Party's
ability to perform its obligations under this LLC
Agreement or to have a material adverse effect on
the consolidated financial condition of such
Representing Party.
(e Such Member is acquiring its interest in
the Company based upon its own investigation, and
the exercise by such Member of its rights and the
performance of its obligations under this LLC
Agreement will be based upon its own investigation,
analysis and expertise. Such Member's acquisition
of its interest in the Company is being made for
its own account for investment, and not with a view
to the sale or distribution thereof.
ARTICLE 10
TRANSFERABILITY
10.1 GENERAL. Except as otherwise specifically
provided in this LLC Agreement, neither a Member nor an
Economic Interest Owner shall have the right without the
unanimous affirmative vote or unanimous consent of all of
the remaining Members with Voting Rights to sell, assign,
encumber, pledge, hypothecate, transfer, exchange,
distribute or otherwise transfer for consideration, gift,
bequeath, distribute or otherwise transfer for no
consideration (whether or not by operation of law, except
in the case of bankruptcy) (each such action a
"Transfer") all or part of its interest in the Company.
The transfer of the Economic Interest of a Bankrupt
Member or Economic Interest Owner shall be governed by
Sections 12.4 and 12.5 below.
Notwithstanding the foregoing restriction, Dobell,
with the prior written consent of KLT in each instance,
may from time to time: (i) transfer all or a part of his
Economic Interest, but not his Voting Rights, to his
spouse or descendants or a custodian for his spouse or
descendants or to a grantor trust described in Section
676 of the Code; or (ii) grant purchase options in his
Economic Interest, but not his Voting Rights, to one or
more managers or consultants employed or engaged by the
Company or a business venture which the Company has
invested in, upon such terms and conditions as he deems
reasonable; provided, however, that each such option will
provide that the option will lapse upon the manager's or
consultant's termination of employment or engagement with
the Company or such business venture, and that if the
option is exercised Dobell and the transferee of his
Economic Interest will comply with the terms of Section
10.2(c) below with respect to the Economic Interest
transferred. If such terms are not complied with for any
such transfer, Dobell shall relinquish all of his Voting
Rights until such time that he cures such non-compliance
to the reasonable satisfaction of the Manager. If Dobell
transfers an Economic Interest to or for the benefit of
a spouse or descendants or to a grantor trust, or if an
option granted to a manager or consultant is exercised,
the Economic Interest so transferred will remain subject
to KLT's rights as provided in Sections 10.3 and 10.5
below.
In the event Dobell transfers any part of his
Economic Interest to or for the benefit of a spouse or
descendants or to a grantor trust or grants any purchase
options in compliance with the terms set forth above,
whether or not exercised, except as otherwise provided in
this LLC Agreement, Dobell shall retain all his Voting
Rights.
Any purported Transfer of any interest in the
Company in contravention of this LLC Agreement shall be
null and void and of no force or effect.
10.2 RIGHT OF FIRST OFFER.
(a If a Member or Economic Interest Owner
(collectively the "Selling Member") desires to sell
all or any portion of its Economic Interest
(excepting the transfer of the Economic Interest of
a Bankrupt Member or Economic Interest Owner, which
shall be governed by Sections 12.4 and 12.5 below),
the Selling Member shall give written notification
to the remaining Members, by certified mail or
personal delivery, of its intention to so transfer
such Economic Interest. The notice shall be
accompanied by a description of the amount of the
Selling Member's Economic Interest which it desires
to sell or transfer, described as a percentage
interest of all of the Economic Interests of the
Company, and a cash price at which the Selling
Member is willing to sell such portion of its
Economic Interest. The Members which elect to
exercise this right of first offer (the "Purchasing
Members") shall have the right to purchase on a pro
rata basis determined with reference to the
relationship of each respective Purchasing Member's
Percentage Interest to the total Percentage
Interests of all of the Purchasing Members, unless
a different allocation is agreed upon by such
Members, all (but not less than all) of the
Economic Interest proposed to be sold by the
Selling Member by giving written notification to
the Selling Member of their intention to do so
within forty-five (45) days after receiving the
Selling Member's written notice. The failure of the
Purchasing Members to so notify the Selling Member
of their desire to exercise this right of first
offer within said forty-five (45) day period shall
result in the termination of the right of first
offer and the Selling Member shall be entitled to
consummate the sale of its Economic Interest in the
Company subject of such notice to any Person at any
time within one hundred eighty (180) days after
such forty-five (45) day period upon such terms as
the Selling Member dictates and at a price which is
not less than the cash price set forth in such
notice. If the Selling Member fails to consummate
a sale of its Economic Interest subject of such
notice at or above stated cash price within such
one hundred eighty (180) day period, then it must
again comply with all of the terms and provisions
of this Section 10.2 before transferring any
portion of such Economic Interest.
(b If the Purchasing Members give written
notice to the Selling Member of their desire to
exercise a right of first offer as provided above,
the Purchasing Members shall have the right to
designate the time, date and place of closing,
provided that the date of closing shall be within
sixty (60) days after the date of the Purchasing
Members' notice of their exercise of the right of
first offer. At the closing of such purchase, the
Purchasing Members shall pay in cash or cash
equivalents the entire purchase price for such
Economic Interest.
(c In the event of the Transfer of a Selling
Member's Economic Interest in the Company, and as a
condition to recognizing the effectiveness and
binding nature of any such Transfer, the Manager
may require the Selling Member and the purchaser,
donee or successor-in-interest of such Economic
Interest, as the case may be, to execute,
acknowledge, and deliver to the Manager such
instruments of transfer, assignment, and assumption
and such other certificates, representations, and
documents, and to perform all the other acts that
the Manager may deem necessary or desirable to:
(i) Constitute such purchaser, donee or
successor-in-interest as an owner of an
Economic Interest in the Company;
(ii) Confirm that the Person desiring to
acquire an Economic Interest in the Company
has accepted, assumed, and agreed to be
subject and bound by all of the terms,
obligations and conditions of this LLC
Agreement, as the same may have been further
amended;
(iii) Preserve the Company after the
completion of such Transfer under the laws of
each jurisdiction in which the Company is
qualified, organized, or does business;
(iv) Maintain the status of the Company
as a partnership for federal and state income
tax purposes; and/or
(v) Assure compliance with any and all
applicable state and federal laws including
securities laws and regulations.
(d Any purchaser, donee or successor-in-
interest of an Economic Interest shall be required
to make additional Capital Contributions to the
same extent as its predecessor in interest would
have been required to make.
(e Any Transfer of an Economic Interest in
the Company shall be deemed effective as of the
last day of the calendar month in which all the
requirements of this Article 10 are complied with.
The Selling Member agrees, upon request of the
Management Committee, to execute such certificates
or other documents and perform such other acts as
may be reasonably requested by the Management
Committee from time to time in connection with such
Transfer.
(f The Selling Member hereby indemnifies the
Company and the remaining Members against any and
all loss, damage, or expense (including, without
limitation, attorneys' fees and tax liabilities or
loss of tax benefits) arising directly or
indirectly from any transfer or purported transfer
in violation of this Article 10.
(g If the Selling Member fails to comply
with any of the terms and conditions set forth
above, including, without limitation assignment of
its Economic Interest to the Purchasing Members
pursuant to their exercise of the right of first
offer as provided above, then such Purchasing
Members may enforce the Selling Member's obligation
by an action for specific performance.
10.3 DOBELL PUT OPTION.
(a If after the fifth anniversary date of
this LLC Agreement, Dobell desires to sell all of
his Economic Interest (including the Economic
Interests transferred by Dobell to permitted
transferees under this Agreement), he shall have
the option to submit to KLT a written notice
setting forth his offer to sell for cash all of his
Economic Interest and Voting Rights at a purchase
price determined by multiplying the Fair Market
Value of the Company (determined as provided in
Section 10.3(e) below) by his Percentage Interest.
(b KLT shall by written notice to Dobell,
within thirty (30) days of delivery of Dobell's
offer, either accept Dobell's offer to sell all of
his Economic Interest and Voting Rights to KLT, or
alternatively elect to exercise KLT's option to
sell all of KLT's Economic Interest and Voting
Rights, together with those of Dobell (free of any
options therein granted by Dobell) and any manager,
descendant, custodian or trustee to which Dobell
has transferred any part of his Economic Interest
as provided for in Section 10.1 above, for a
purchase price determined by multiplying the Fair
Market Value of the Company multiplied by the
Percentage Interests associated with such Economic
Interests and Voting Rights so sold.
(c KLT shall make such an election by
providing written notice of such election to Dobell
within thirty (30) days of Dobell's delivery of his
offer as provided in Section 10.3(a). If KLT
elects to accept Dobell's offer, the closing date
for KLT's purchase of Dobell's Economic Interest
and Voting Rights shall occur on the tenth (10th)
business day following KLT's notice to Dobell of
its election to accept his offer. At the closing,
Dobell (and his permitted transferees, if any)
shall execute, acknowledge and deliver to KLT such
instruments of transfer, assignment and assumption
and such other certificates, representations and
documents, and perform all other acts that KLT
deems necessary or desirable to transfer Dobell's
(and his permitted transferees, if any) Economic
Interest and Voting Rights to KLT, free and clear
of all liens, claims and encumbrances, and KLT
shall deliver to Dobell (and to his permitted
transferees in accordance with their respective
Economic Interests) payment in cash of the purchase
price for his Economic Interest and Voting Rights.
(d If KLT elects to exercise its option to
sell all of the Economic Interests and Voting
Rights of KLT, Dobell and Dobell's transferees, KLT
shall have the authority to enter into a purchase
and sale agreement on behalf of Dobell and his
permitted transferees either for the sale of such
Persons' Economic Interests and Voting Rights or
for the sale of all of the properties and assets of
the Company, for the Fair Market Value of the
Company and upon such other terms and conditions as
KLT deems appropriate, such agreement to be entered
into not later than one hundred eighty (180) days
after the date of KLT's notice to Dobell electing
such option. If such agreement is not closed
within two hundred seventy (270) days after the
date of such notice, KLT shall be required to
purchase Dobell's Economic Interest and Voting
Rights pursuant to the Fair Market Value. If KLT
sells all of such Economic Interests and Voting
Rights or the assets and properties of the Company
pursuant to this Section 10.3, then each of the
Members and Economic Interest Owners will receive a
portion of the sales proceeds, net of costs of
sale, determined with reference to Section 12.7
below. Each Member and Economic Interest Owner
agrees to execute, acknowledge and deliver such
instruments of transfer, assignment and assumption
and such other certificates, representations and
documents, and perform all other acts that KLT
deems necessary or desirable to transfer the
Member's or Economic Interest Owner's Economic
Interests and Voting Rights or provide for the sale
by the Company of the Company's assets and
properties, pursuant to this Section 10.3.
(e For purposes of this Section 10.3 (and,
if necessary, Sections 10.4 and 10.5), the "Fair
Market Value" of the Company shall be the amount
determined in good faith by Dobell and as stated in
his written notice setting forth his offer to sell
his Economic Interest and Voting Rights as provided
in Section 10.3(a); provided, however, that if
within thirty (30) days of Dobell's delivery of
such offer, KLT provides notice to Dobell of its
disagreement with such Fair Market Value, KLT and
Dobell shall, prior to the expiration of such
thirty (30) day period, agree upon a mutually
acceptable Fair Market Value for purposes of this
Section 10.3. If KLT and Dobell are unable to
agree upon a fair market value within such period
of time, the Fair Market Value shall be determined
by an appraiser ("the ""ppraiser") agreed to by
parties. If the parties cannot agree upon an
appraiser, then KLT and Dobell each shall select
one appraiser to perform a separate appraisal of
the Company's fair market value. If the two
appraisals differ by less than ten percent (10%) of
the lower appraised value, the average of the two
appraisals shall be used as the Fair Market Value.
If the two appraisals differ by more than ten
percent (10%), the two appraisers selected shall
select a third appraiser, which third appraiser
shall select one of the two previously prepared
appraisals which he or she believes is closest to
the actual fair market value of the Company, which
amount shall thereafter constitute the Fair Market
Value to be used in this Section 10.3. The costs
of such appraisals shall be shared equally between
the parties. Any time limitations imposed upon a
party to make any election under this Section 10.3
shall be stayed during such determination.
10.4 CHANGE OF CONTROL.
(a Notwithstanding anything to the contrary
herein, if either: (i) a Person not a party to this
Agreement acquires beneficial ownership of more
than fifty percent (50%) of the outstanding shares
of voting stock of Kansas City Power & Light
Company (AKCPL") with the ability to vote such
beneficial ownership to direct the affairs of KCPL;
or (ii) a majority of KCPL management's slate of
candidates for directors of KCPL are not elected at
any KCPL shareholder meeting called for such
purpose; Dobell shall have the option to purchase,
or cause to be purchased, for cash at the closing
KLT's entire Economic Interest and Voting Rights.
Such option shall be exercised by Dobell's notice
to KLT within nine (9) months following the
completion of any such merger or acquisition of
KCPL or election of directors, with the closing of
such purchase to occur within sixty (60) days after
date of such notice.
(b The purchase price for KLT's Economic
Interest and Voting Rights shall be an amount equal
to the higher of:
(1) The Fair Market Value of the Company
(determined in accordance with Section
10.3(e)) multiplied by KLT's Percentage
Interest; and
(2) The sum of: (i) all Capital
Contributions made by KLT to the Company, the
accrued but unpaid KLT Loan Interest, the
outstanding principal balance of the KLT
Loans, and the amount of any Net Profits
allocated to KLT's Capital Account; and (ii)
an amount which shall allow KLT to receive an
Internal Rate of Return (determined as
provided in Section 8.1 above) of fifteen
percent (15%) on all of its Capital
Contributions and KLT Loans as such amounts
are outstanding from time to time, if the
closing as provided above occurs before the
first anniversary date of this LLC Agreement.
If the closing as provided above occurs after
the first anniversary date of this LLC
Agreement, the purchase price shall be
determined as so provided except so as to
allow KLT to receive an Internal Rate of
Return of twenty-five percent (25%) on all of
its Capital Contributions and KLT Loans.
PROVIDED, HOWEVER, that until the second
anniversary of this Agreement, subsection (b)(1),
above, shall not be effective. At the closing, KLT
shall execute, acknowledge and deliver to Dobell
such instruments of transfer, assignment and
assumption and such other certificates,
representations and documents, and perform all
other acts that Dobell deems necessary or desirable
to transfer KLT's Economic Interest and Voting
Rights to Dobell, free and clear of all liens,
claims and encumbrances and Dobell shall deliver to
KLT payment in cash of the purchase price for KLT's
Economic Interest and Voting Rights as determined
above. Dobell shall have the right to cause the
incorporation of the Company (with stock in the
corporation issued according to the relative
Economic Interest owned by the Members and Economic
Interest Owners) in conjunction with the closing of
the purchase of KLT's Economic Interest and Voting
Rights pursuant to this Section 10.4; provided,
however, that such incorporation does not cause any
material adverse tax consequences to KLT, such
determination which shall be made by KLT in its
sole and absolute discretion.
10.5 KLT'S OPTION TO PURCHASE.
(a KLT and Dobell each acknowledge that on
or after the effective date of this LLC Agreement,
the Company and Dobell will enter into an
employment agreement providing for the Company's
employment of Dobell. If Dobell's employment with
the Company is terminated for cause or by Dobell's
voluntary act, pursuant to the terms of such
employment agreement, then KLT shall have the
option to purchase for cash all of Dobell's
Economic Interest and Voting Rights and all of the
Economic Interests (and Voting Rights, if any) of
any permitted transferee to which Dobell has
transferred any part of his Economic Interest as
provided in Section 10.1 above.
(b If KLT elects to exercise its option as
provided in this Section 10.5, within thirty (30)
days after the termination of Dobell's employment,
KLT shall provide Dobell notice of such election,
with a copy to each of his transferees, which shall
set forth a cash purchase price for the Economic
Interests and Voting Rights to be purchased
determined by multiplying the fair market value of
the Company by the Percentage Interests to be
purchased, and a date for closing such purchases
which shall not be more than thirty (30) days after
the date of such notice. If Dobell disagrees with
the fair market value determined by KLT, then
Dobell and KLT shall arrive at a mutually
acceptable Fair Market Value as provided in Section
10.3(e) above.
(c At the closing, Dobell and each of his
transferees shall execute, acknowledge and deliver
to KLT such instruments of transfer, assignment and
assumption and such other certificates,
representations and documents, and perform all
other acts that KLT deems necessary or desirable to
transfer his Economic Interest and Voting Rights,
and his transferee's Economic Interests and Voting
Rights, if any, to KLT free and clear of all liens,
claims, options and encumbrances, and KLT shall
deliver to Dobell and his transferees payment in
cash of the purchase price for the Economic
Interests and Voting Rights purchased.
10.6 TRANSFEREE NOT MEMBER IN ABSENCE OF CONSENT.
Notwithstanding anything contained in this LLC Agreement
to the contrary, if all of the remaining Members with
Voting Rights do not by unanimous affirmative vote or
unanimous consent approve of the proposed Transfer of a
Member's or Economic Interest Owner's Economic Interest
in the Company to a transferee or donee who is not a
Member immediately before the Transfer and the admission
of such transferee as a Member as provided in Article 11
below, the proposed transferee or donee shall have no
right to participate in the management of the business
and affairs of the Company, including, without
limitation, any rights to appoint representatives to the
Management Committee, or to become a Member. Subject to
the satisfaction of the requirements of Section 10.2
above, the transferee or donee shall be merely an
Economic Interest Owner. Furthermore, except as agreed
upon by all of the remaining Members or as otherwise
provided in this LLC Agreement or the Delaware Act, upon
a Member's transfer of its entire Economic Interest, such
Member's rights to participate in the management and
affairs of the Company, including, without limitation,
its Voting Rights, and any rights to appoint
representatives to the Management Committee, shall cease.
ARTICLE 11
ADMISSION OF SUCCESSOR MEMBERS OR NEW MEMBERS
11.1 ADMISSION OF SUCCESSOR MEMBERS OR NEW MEMBERS.
A Person, including a transferee or donee of a Member or
other Person owning an Economic Interest, shall be deemed
admitted as a Member of the Company only upon the
satisfactory completion of the following:
(a) All of the Members or remaining Members
with Voting Rights, as the case may be, shall have
consented to the admission of the Person as a
Member of the Company and, in the case of a new
Member, all of the Members with Voting Rights shall
have consented to the amount and character of the
proposed Capital Contribution of such new Member.
(b) The Person shall have accepted and agreed
to be bound by the terms and provisions of this LLC
Agreement and such other documents or instruments
as the Management Committee may require.
(c) The Person shall have executed a
counterpart of this LLC Agreement to evidence the
consents and agreements above, and any changes in
the Certificate of Formation of the Company and
this LLC Agreement shall have been executed and
filed as deemed necessary by the Management
Committee.
(d) If the Person is a corporation,
partnership, limited liability company, trust,
association or other entity, the Person shall have
provided the Management Committee with evidence
satisfactory to counsel for the Company of its
authority to become a Member under the terms and
provisions of this LLC Agreement.
(e) If required by the Management Committee,
counsel for the Company or a qualified counsel for
the transferee or donee or new Member, which
counsel shall have been approved of by the Members,
shall have rendered an opinion to the Members that
the admission of the Person as a Member is in
conformity with the Delaware Act and that none of
the actions in connection with the admission will
cause the termination or dissolution of the Company
or will adversely affect its classification as a
partnership for federal and state income tax
purposes.
(f) The Person, as required by the Management
Committee, shall have paid all reasonable legal
fees of the Company and the Members and filing
costs in connection with its admission as a Member.
11.2 FINANCIAL ADJUSTMENTS. No new Members shall
be entitled to any retroactive allocation of losses,
income, or expense deductions incurred by the Company.
The Company may, at its option, at the time a Member is
admitted, close the Company's books (as though the
Company's tax year had ended) or make pro rata
allocations of loss, income, and expense deductions to a
new Member for that portion of the Company's tax year in
which a Member was admitted in accordance with the
provisions of Section 706 of the Internal Revenue Code of
1986, as amended, and the Treasury Regulations
promulgated thereunder.
ARTICLE 12
TERM. TERMINATION. AND DISTRIBUTION UPON LIQUIDATION
12.1 TERM. The term of the Company shall commence
on the date the Certificate of Formation for the Company
is filed in the Office of the Delaware Secretary of State
in accordance with the Delaware Act and shall continue
until December 31, 2046, unless earlier dissolved by the
unanimous written consent of all of the Members with
Voting Rights, or the provisions of the Certificate of
Formation, this LLC Agreement or the Delaware Act.
12.2 WITHDRAWAL OF A MEMBER. A Member may
withdraw, retire or resign from the Company at any time
upon giving ninety (90) days prior written notice of such
withdrawal to the remaining Members; provided, however,
that absent the approval of such withdrawal by the
affirmative vote or consent of a Majority in Interest of
the remaining Members within such ninety (90) day notice
period, such a withdrawal shall be deemed a breach of
this LLC Agreement allowing the Company to recover from
the withdrawing Member damages for such breach as
reasonably determined by the remaining Members,
including, without limitation, attorneys' fees, and
offset such damages against the amounts otherwise
distributable to the withdrawing Member.
Subject to the remaining provisions of this LLC
Agreement, upon the withdrawal of a Member, the
withdrawing Member shall be entitled to the fair market
value of its Economic Interest, which amount shall be
equal to the sum of the withdrawing Member's Percentage
Interest of both (i) the Company's Net Profits or Net
Losses for the year in which the withdrawal occurs
through the date of the withdrawal (less any
distributions of Net Cash Flow made to the withdrawing
Member through the date of such withdrawal); and (ii) the
value of the Company's assets, net of the Company's
debts, liabilities and obligations; less any deficit
balance in the withdrawing Member's Capital Account, such
consideration which the Company shall pay in cash at the
closing, which closing shall be within thirty (30) days
of the date such purchase price is determined at such
time and place as designated by the Company. For purposes
of this determination, the value of the Company's assets,
other than cash, certificates of deposit and other
instruments the value of which are readily ascertainable,
shall be determined with reference to the fair market
value of such assets as determined by the Company's
regularly employed independent certified public
accountant, which determination shall be final, binding
and conclusive upon all parties.
Notwithstanding the foregoing, if such withdrawal
is deemed to be a breach of this LLC Agreement as
provided above, then the amount to which the withdrawing
Member is entitled for its Economic Interest shall not
include any amount attributable to the goodwill of the
Company and shall be reduced by an amount equal to any
damages attributable to such breach as described above.
12.3 EVENTS OF DISSOLUTION. Unless the
continuation of the Company's business is approved by the
affirmative vote or consent of a Majority in Interest of
the remaining Members within ninety (90) days of an event
of withdrawal, the Company shall immediately dissolve.
An event of withdrawal shall include:
(a The withdrawal, retirement or resignation
of a Member absent the approval of the remaining
Members and the failure to purchase a withdrawing
Member's Economic Interest as provided in Section
12.2 above;
(b In the case of a Member that is a natural
person, the death or insanity of a Member or the
entry by a court of competent jurisdiction
adjudicating a Member incompetent to manage his
person or his estate;
(c A Member becoming a Bankrupt Member (as
defined in Section 12.4 below);
(d In the case of a Member that is a trust,
the termination of the trust or the distribution of
such trust's entire interest in the Company, but
not merely the substitution of a new trustee;
(e In the case of a Member that is a general
or limited partnership, the dissolution and
commencement of winding up of such partnership or a
distribution of its entire interest in the Company;
(f In the case of a Member that is a
corporation, the filing of articles of dissolution,
or their equivalent, for the corporation or
revocation of its charter or its distribution of
its entire interest in the Company;
(g In the case of a Member that is an
estate, the distribution by the fiduciary of the
estate's entire interest in the Company;
(h In the case of a Member that is a limited
liability company, the filing of a certificate of
cancellation or articles of dissolution or
termination, or their equivalent, for the limited
liability company or a distribution of its entire
interest in the Company;
(i December 31, 2046;
(j The unanimous affirmative vote or
unanimous consent by all of the Members with
Voting Rights to dissolve, wind up and
liquidate the Company;
(k The happening of any other event
that makes it unlawful or impossible to carry
on the business of the Company; or
(l Any event which causes there to be
only one (1) Member.
Except as otherwise provided in this LLC Agreement or the
Delaware Act, upon the occurrence of an event of
withdrawal as described in subsection (a) through (h)
above, the Member subject of such an event shall cease to
be a Member and shall thereafter be an Economic Interest
Owner. An event of withdrawal shall not include a
Transfer of a Member's interest pursuant to Article 10
above.
12.4 BANKRUPTCY OF A MEMBER. A "Bankrupt Member"
shall mean any Member or Economic Interest Owner who:
(a makes an assignment for the benefit of
its creditors;
(b files a voluntary petition in bankruptcy;
(c files a petition or answer seeking for
itself any reorganization, arrangement,
composition, readjustment, liquidation, dissolution
or similar relief under any statute, law or
regulation or files an answer or other pleading
admitting or failing to contest the material
allegations of a petition filed against it in any
proceeding of such nature;
(d seeks, consents or acquiesces in the
appointment of a trustee, receiver or liquidator of
the Member or Economic Interest Owner or of all or
any substantial part of its property; or
(e is the subject of any proceeding seeking
reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar
relief under any statute, law or regulation, and
one hundred twenty (120) days after commencement of
such proceeding, the proceeding has not been
dismissed; or without the Members' or Economic
Interest Owners' consent or acquiescence has had a
trustee, receiver or liquidator appointed for
itself or for a substantial part of its property
and the appointment is not vacated or stayed, or
within ninety (90) days after the expiration of any
such stay, the appointment is not vacated.
12.5 OPTION TO PURCHASE. The remaining Members
shall have the option to purchase the Economic Interest
and Voting Rights, if any, of a Bankrupt Member for the
purchase price determined and paid in accordance with the
methodology, terms and conditions provided in Section
12.2 above for the purchase of a withdrawing Member's
interest; provided, however, that no discounts shall be
made to the purchase price for any deemed breach of the
LLC Agreement. If the remaining Members do not elect to
acquire all of the Bankrupt Member's interest, the
interest shall be transferred in accordance with Article
10 above, or if not transferred, retained by the Bankrupt
Member. If the remaining Members exercise their option
hereunder and the Bankrupt Member fails to assign its
interest in the Company at the time and place fixed for
closing, then the remaining Members may enforce the
obligation of the Bankrupt Member by an action for
specific performance.
12.6 CESSATION OF BUSINESS. In the event of the
occurrence of any event effecting the dissolution of the
Company, the Company shall cease to carry on its
business, except insofar as may be necessary for the
winding up of its business, but its separate existence
shall continue until the Manager has filed a certificate
of cancellation in the office of Delaware Secretary of
State or until a decree terminating the Company has been
entered by a court of competent jurisdiction.
12.7 WINDING UP. LIQUIDATION. AND DISTRIBUTION OF
ASSETS. Upon dissolution, an accounting shall be made of
the accounts of the Company and of the Company's assets,
liabilities and operations, from the date of the last
previous accounting until the date of dissolution and the
Manager shall immediately proceed to wind up the affairs
of the Company. If the Company is dissolved and its
affairs are to be wound up, the Manager shall:
(a) Collect and sell or otherwise liquidate
all of the Company's assets as promptly as
practicable (except to the extent all of the
Members by an affirmative and unanimous vote or
consent may determine to distribute any assets to
the Members and Economic Interest Owners in kind);
(b) Allocate any Net Profits or Net Losses
resulting from such sale or other disposition of
the Company's assets to the Members' and Economic
Interest Owners' Capital Accounts in accordance
with Section 2.1(b) above;
(c) Discharge all debts, liabilities and
obligations of the Company, including those to
Members and Economic Interest Owners who are
creditors, including KLT to the extent any KLT Loan
Interest or KLT Loan remains unpaid, to the extent
otherwise permitted by law, other than debts,
liabilities and obligations to Members and Economic
Interest Owners for distributions, and establish
such reserves as the Management Committee may deem
reasonably necessary to provide for contingencies
or liabilities of the Company (for purposes of
determining the Capital Accounts of the Members and
Economic Interest Owners, the amounts of such
reserves shall be deemed to be an expense of the
Company);
(d) Distribute the remaining assets to the
Members and Economic Interest Owners either in cash
or in kind, with any assets distributed in kind
being valued for this purpose at their fair market
value, as follows and in the following order of
priority:
(i) First, to the Members and Economic
Interest Owners with positive Preference
Contribution Account balances, in proportion
to their respective Preference Contribution
Account balances, up to the amount necessary
to reduce all such Preference Contribution
Account balances to zero;
(ii) Second, to KLT until such
distributions, together with all prior
distributions of Net Cash Flow and/or of the
Company's assets,including amounts distributed
as repayments of KLT Loans, KLT Loan Interest
and returns of KLT's Capital Contributions,
are such that KLT has received an Internal
Rate of Return (determined as provided in
Section 8.1 above) of twenty-five percent
(25%) on all of its Capital Contributions and
KLT Loans as such amounts are outstanding from
time to time; and
(iii) The balance, if any, to the Members
and Economic Interest Owners in proportion to
their Percentage Interests; provided, however,
that the amount distributable to KLT under
this Section 12.7(d)(iii) shall be credited by
the amounts distributed to KLT pursuant to
Section 12.7(d)(ii).
If any assets of the Company are to be distributed
in kind, the fair market value of those assets as
of the date of dissolution, other than cash,
certificates of deposit and other instruments the
value of which are readily ascertainable, shall be
as determined as provided in Section 12.2 above.
Those assets shall be deemed to have been sold as
of the date of dissolution for their fair market
value, and the Capital Accounts of the Members and
Economic Interest Owners shall be adjusted pursuant
to the provisions of this LLC Agreement to reflect
such deemed sale;
(e) Upon completion of the winding up,
liquidation and distribution of the assets, the
Company shall be deemed terminated; and
(f) The remaining Members shall comply with
any applicable requirements of the Delaware Act
pertaining to the winding up of the affairs of the
Company and the final distribution of its assets.
12.8 CERTIFICATE OF CANCELLATION. When all debts,
liabilities, and obligations have been paid and
discharged or adequate provisions have been made therefor
and all of the remaining assets have been distributed to
the Members and Economic Interest Owners, the Manager
shall execute a certificate of cancellation setting forth
the information required by the Delaware Act and shall be
delivered to the Delaware Secretary of State.
12.9 RETURN OF CONTRIBUTION NONRECOURSE TO OTHER
MEMBERS. Except as provided by law or as expressly
provided in this LLC Agreement, upon dissolution, each
Member and Economic Interest Owner shall look solely to
the assets of the Company for the return of its Capital
Contributions. If the Company assets remaining after the
payment or discharge of the debts and liabilities of the
Company is insufficient to return the Capital
Contributions of the Members and Economic Interest
Owners, the Members and Economic Interest Owners shall
have no recourse against any other Member or Economic
Interest Owner.
ARTICLE 13
MISCELLANEOUS PROVISIONS
13.1 WAIVER OF RIGHT OF PARTITION. It is
specifically agreed that no Member or Economic Interest
Owner shall have the right to ask for partition of the
assets owned or hereafter acquired by the Company, nor
shall any such Member or Economic Interest Owner have the
right to any specific assets of the Company on the
liquidation or winding up of the Company, except as may
be specified by a Majority in Interest.
13.2 NOTICES. Except as otherwise provided in this
LLC Agreement, any notice required or permitted herein
shall be in writing and shall be deemed to have been
delivered, whether actually received or not, two (2)
calendar days after being deposited in the United States
mail, by registered mail, return receipt requested,
postage prepaid, addressed to the party entitled thereto
at the last address of such party provided by such party
to the Company. Any notice to the Company shall be sent
to the Company's principal place of business.
13.3 GOVERNING LAW. This LLC Agreement has been
made and executed in accordance with the Delaware Act and
is to be construed, enforced, and governed in accordance
therewith and with the laws of the State of Delaware.
The parties agree that all actions or proceedings arising
directly or indirectly from this Operation Agreement
shall be commenced and litigated only in the Circuit
Court of Xxxxxxx County, Missouri, or the United States
District Court of Missouri, Western District, located in
Kansas City, Missouri. The parties hereby consent to the
jurisdiction over them of the Circuit Court of Xxxxxxx
County, Missouri, or the United States District Court of
Missouri, in all actions or proceedings arising directly
or indirectly from this LLC Agreement.
13.4 ENTIRE AGREEMENT. Except as otherwise provided
herein, this LLC Agreement together with the recitals and
Exhibits hereto, each of which are incorporated herein,
constitutes the entire agreement among the Members on the
subject matter hereof and may not be changed, modified,
amended, or supplemented except in writing, signed by all
of the Members. All other oral or written agreements,
promises, and arrangements in relation to the subject
matter of this LLC Agreement are hereby rescinded.
13.5 BINDING AGREEMENT. Subject to the
restrictions and encumbrances set forth herein, the terms
and provisions of this LLC Agreement shall be binding
upon, be enforceable by and inure to the benefit of the
Members, Economic Interest Owners and their respective
heirs, executors, administrators, personal
representatives, successors, and assigns.
13.6 INTERPRETATION. The descriptive headings
contained in this LLC Agreement are for convenience only
and are not intended to define the subject matter of the
provisions of this LLC Agreement and shall not be
resorted to for interpretation thereof.
13.7 SEVERABILITY. If any provision of this LLC
Agreement or the application thereof to any individual or
entity or circumstance shall be invalid or unenforceable
to any extent, the remainder of this LLC Agreement and
the application of such provisions to other individuals
or entities or circumstances shall not be affected
thereby and shall be enforced to the greatest extent
permitted by law.
13.8 WAIVER. No consent or waiver, express or
implied, by any Member or Economic Interest Owner to or
of any breach or default by any other Member or Economic
Interest Owner in the performance by such other Member or
Economic Interest Owner of its obligations under this LLC
Agreement shall be deemed or construed to be a consent or
waiver to or of any other breach or default in the
performance by such other Member or Economic Interest
Owner of the same or any other obligations hereunder. The
failure on the part of any Member or Economic Interest
Owner to complain of any act or failure to act of any of
the other Members or Economic Interest Owners or to
declare any of the other Members or Economic Interest
Owners in default, irrespective of how long such failure
continues, shall not constitute a waiver by such Member
or Economic Interest Owner of its rights under this LLC
Agreement.
13.9 EQUITABLE REMEDIES. The rights and remedies
of any of the Members or Economic Interest Owners
hereunder shall not be mutually exclusive. Each of the
Members and Economic Interest Owners confirms that
damages at law may be an inadequate remedy for a breach
or threatened breach of this LLC Agreement and agrees
that in the event of a breach or threatened breach of any
provision hereof, the respective rights and obligations
hereunder shall be enforceable by specific performance,
injunction or other equitable remedy, but nothing herein
contained is intended to, nor shall it, limit or affect
any right or rights at law or by statute or otherwise of
a Member or Economic Interest Owners aggrieved as against
a party for a breach or threatened breach of any
provision hereof; it being the intention hereof to make
clear the agreement of the Members and Economic Interest
Owners that the respective rights and obligations of the
Members and Economic Interest Owners hereunder shall be
enforceable in equity as well as at law or otherwise.
13.10 ATTORNEY'S FEES. In the event of a
default by a Member or Economic Interest Owner under this
LLC Agreement, the non-defaulting Members and Economic
Interest Owners shall be entitled to recover all costs
and expenses, including attorney's fees, incurred as a
result of said default or in connection with the
enforcement of this LLC Agreement.
13.11 COUNTERPARTS. This LLC Agreement may be
executed in two (2) or more counterparts, all of which
taken together shall constitute one (1) instrument.
13.12 GENDER. Whenever in this LLC Agreement,
words, including pronouns, are used in masculine or
neuter, they shall be read and construed in the
masculine, feminine or neuter, as the case may be,
wherever they would so apply, and wherever in this LLC
Agreement, words, including pronouns, are used in the
singular or plural, they shall be read and construed in
the plural or singular, respectively, wherever they would
so apply.
13.13 SAVING CLAUSE. In the event any
provision of this LLC Agreement shall be, or shall be
found to be, contrary to the Delaware Act, such provision
shall be deemed amended so as to conform with such Act.
13.14 FURTHER DOCUMENTATION. Each of the
parties hereto agrees in good faith to execute such
further or additional documents as may be necessary or
appropriate to fully carry out the intent and purpose of
this LLC Agreement.
13.15 INCORPORATION OF RECITALS. The preamble
and recitals to this LLC Agreement are hereby
incorporated by reference and made an integral part
hereof.
13.16 INDEMNIFICATION. The Company shall
indemnify any Member, Manager or officer of the Company
who was or is a party or is threatened to be made a party
to any threatened, pending or completed action,
arbitration, suit or proceeding, whether civil, criminal,
administrative or investigative, other than an action by
or in the right of the Company, by reason of the fact
that such Member, Manager or officer is or was a Member,
Manager or officer of the Company or is or was serving at
the request of the Company as a director or officer of
another corporation, partnership, joint venture, trust,
or other enterprise, against liability incurred in
connection with such action, arbitration, suit or
proceeding, including attorneys' fees, judgments, fines
and amounts paid in settlement actually and reasonably
incurred by such Member, Manager or officer in connection
with such action, arbitration, suit or proceeding,
including any appeal thereof, if such Member, Manager or
officer acted in good faith and in a manner such Member,
Manager or officer reasonably believed to be in or not
opposed to the best interests of the Company and, with
respect to any criminal action or proceeding, had no
reasonable cause to believe such Member's, Manager's or
officer's conduct was unlawful, except that no
indemnification shall be made in respect of any claim,
issue or matter as to which such Member, Manager, or
officer shall have been adjudged to be liable for gross
negligence or gross misconduct in the performance of such
Member's, Manager's, or officer's duty to the Company
unless and only to the extent that the court or
arbitration in which the action, arbitration or suit was
brought determines upon application that, despite the
adjudication of liability and in view of all the
circumstances of the case, such Member, Manager, or
officer is fairly and reasonably entitled to indemnity
for such expenses which the court or arbitration shall
deem proper. The termination of any action, arbitration,
suit, or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption
that the Member, Manager or officer did not act in good
faith and in a manner which such Member, Manager or
officer reasonably believed to be in or not opposed to
the best interests of the Company and, with respect to
any criminal action or proceeding, had reasonable cause
to believe that such Member's, Manager's or officer's
conduct was unlawful.
IN WITNESS WHEREOF, the parties hereto have signed
this LLC Agreement to be effective on the date first
above written.
KLT TELECOM INC.,
a Missouri corporation
By: /s/X. X. Xxxxxx
Name: X. X. Xxxxxx
Title: President
XXXXX XXXXXX
/s/Xxxxx Xxxxxx
Xxxxx Xxxxxx
EXHIBIT A
LIMITED LIABILITY COMPANY AGREEMENT OF MUNICIPAL
SOLUTIONS, LLC
Description Inital Inital
Fair Market Value of Percentage Voting
NAME INITAL CAPITAL INTEREST RIGHTS
CONTRIBUTION
KLT Telecom Inc. $2,000.00 67% 80%
FEIN
Xxxxx Xxxxxx $ 500.00 33% 20%
SSN:
